Social Security Reform and the Dow Jones

[Zeluvia]

Okay trying hard to keep up with this issue.

If we privatize social security and dump that money on the stock market, what happens?

When pension plans went to 401ks we had an increase in the stock market and investment.

Questions:

Where is Social Security money currently invested?

What companies will manage the Privatized accounts, and what will be the "load" on the accounts?

What happens if this creates another "bubble" of inflated values that bursts?

Will we be able to invest in companies or countries other than the US?

Currently my father in law collects Social Security, a Civil Service pension, SSI, and a Military Pension. He makes more money than I do working, in fact he makes more money than he did when he was working.
Wasn't this multiple dipping into government pensions made illegal?

Is social security at all tied to income levels? Should it be? Should it be tied or earnings or to other pension incomes?

How many people actually live exclusively on Social Security now? How have military pensions been changed? Will the military have to depend on social security?

How many people actually have decent private pension plans?

My mother was fired from her job at 9 years and 11 months, 1 month before becoming "vested" in her pension plan. She was therefore not eligible for company benefits. Are there any laws to stop companies from this? This was a common practice of this department store. We attempted legal recourse with them over this but couldnt in the end find a lawyer or agency that would take the case.

What about retirement age? Do we need laws to stop forced or mandatory retirement first? I have to work till I am 72, but can I get a job from 62 to 72?

[Captain Ochre]

Okay trying hard to keep up with this issue.

If we privatize social security and dump that money on the stock market, what happens?

Many things could happen. As it stands, the proposal is to allow a normal type of private investment for a small portion of the socsec deduction. There's an infusion of money into the market, and brokers receive fees from those investments, also.

When pension plans went to 401ks we had an increase in the stock market and investment.

Probably the same sort of thing will happen.

Questions:

Where is Social Security money currently invested?

It isn't.
Your money is spent by the government MOL as though it is a regular tax. The government gives you a promise to pay you a certain amount of money when you retire, provided you meet certain conditions (such as not being too rich to qualify to get your money back). Oh, and they reserve the right to tax your social security income. If you're black, then your chances of getting your money back are slimmer, since your average life expectancy is considerably shorter.
For the average person who receives socsec retirement benefits, the payments represent a far smaller return on investment than would be expected on the basis of even below-average stock market performance.

What companies will manage the Privatized accounts, and what will be the "load" on the accounts?

I don't know. Probably no higher than normal.

What happens if this creates another "bubble" of inflated values that bursts?

Some people will lose value on their investments. This isn't that big of a concern unless a person is near retirement, however. Anyway, inflated values simply reflected an overvaluing of the investment in the first place. After adjustment, you're still getting a far better return on investment over the long haul. "Far" should probably be emphasized.

Will we be able to invest in companies or countries other than the US?

Good question. Freedom suggests yes, national economic self-interest suggests no.

Currently my father in law collects Social Security, a Civil Service pension, SSI, and a Military Pension. He makes more money than I do working, in fact he makes more money than he did when he was working.
Wasn't this multiple dipping into government pensions made illegal?

I dunno. If it is illegal, then this case is a good one of the government's right hand not knowing what the left hand is doing.
Maybe we should put the government in control of healthcare?

Is social security at all tied to income levels? Should it be? Should it be tied or earnings or to other pension incomes?

If you're too rich then you don't receive soc sec benefits, as I understand it. Your dad may be an exception.

How many people actually live exclusively on Social Security now? How have military pensions been changed? Will the military have to depend on social security?

That I cannot tell you without doing research that you could probably do just as easily as I.

How many people actually have decent private pension plans?

I know of some personally.
Not an answer to your question, I realize. I'm skipping this one, too.

My mother was fired from her job at 9 years and 11 months, 1 month before becoming "vested" in her pension plan. She was therefore not eligible for company benefits. Are there any laws to stop companies from this? This was a common practice of this department store. We attempted legal recourse with them over this but couldnt in the end find a lawyer or agency that would take the case.

That would be a tough case to win unless there were a law compelling companies to refrain from firing employees close to their vestment date. It's an unscrupulous practice from what I can see, but companies should have say in how they will disburse company benefits so long as they do not break contract.
This make a good case for private responsibility in planning for retirement. Don't trust your government or your company to take care of it for you.

What about retirement age? Do we need laws to stop forced or mandatory retirement first? I have to work till I am 72, but can I get a job from 62 to 72?

That probably depends on your physical condition and work skills. I can see initiative playing a part, also.

[Teallaura]

Okay trying hard to keep up with this issue.

If we privatize social security and dump that money on the stock market, what happens?

When pension plans went to 401ks we had an increase in the stock market and investment.?

Over the long haul, it probably will act like the 401ks did - but the plan (what there is of it) on the table is to privatize only a portion - the funds coming from the youngest investors. I doubt we'd see an immediate jump on a huge scale.

Questions:

Where is Social Security money currently invested?

Captain Ochre is correct. Incoming funds are disbursed or directed elsewhere (called 'dipping' - it's a no-no that's been going on for 40+ years).

What companies will manage the Privatized accounts, and what will be the "load" on the accounts?

Don't know - waiting to see the plan unveiled - probably few private companies would manage accounts - but I honestly don't know at this stage. If it's based on the Chilean model, the government will manage the accounts proper.

What happens if this creates another "bubble" of inflated values that bursts?

Since current and near retirees cannot use the program, they will be insulated from it (how that works is yet another question as funds that would have been disbursed are diverted into private accounts....).

Will we be able to invest in companies or countries other than the US?

I doubt there will be a lot of individual selection amongst specific stocks. Probably more of a money market model. There will be a lot of pressure to choose homegrown over foreign, but I suspect some foreign investments will be included. That makes good sense financially - how it will play out politically remains to be seen.

Currently my father in law collects Social Security, a Civil Service pension, SSI, and a Military Pension. He makes more money than I do working, in fact he makes more money than he did when he was working.
Wasn't this multiple dipping into government pensions made illegal?

No, not as long as he is eligible and none of the programs excludes any of the others. Only Soc Sec would be problematic from the list you gave - and that would in some part depend on income and age.

Is social security at all tied to income levels? Should it be? Should it be tied or earnings or to other pension incomes?

Yes, but not all sources of income are equal, as I understand it. A pension is considered differently from a job - how that is formulated, I don't know.
Not in a perfect world - you should get out what you put in, at the very least. But if that model were used initially, your grandmom and mine would have been ineligible - and likely starved (in the Depression - okay, I'm old).

How many people actually live exclusively on Social Security now? How have military pensions been changed? Will the military have to depend on social security?

How many people actually have decent private pension plans?

Don't know.

My mother was fired from her job at 9 years and 11 months, 1 month before becoming "vested" in her pension plan. She was therefore not eligible for company benefits. Are there any laws to stop companies from this? This was a common practice of this department store. We attempted legal recourse with them over this but couldnt in the end find a lawyer or agency that would take the case.

I'd look into a class action lawsuit - a whole bunch of people can spread out the initial cost of the legal work - and give a company pause!

What about retirement age? Do we need laws to stop forced or mandatory retirement first? I have to work till I am 72, but can I get a job from 62 to 72?

Depends on the law - in some jobs, like airline pilots, having a mandatory retirement age makes sense ('This is your captain speaking. We'll be cruising at 30,000, er, no, 40,000 feet - danged gauge - and there will be prune juice for everyone! Today's my ninety-ninth birthday - where'd I put that throttle...) It's a good point - there will be some age discrimination lawsuits coming along in the next few years either way - Baby Boomers aren't likely to age gracefully.....

[Sacrificial Ram]

My mother was fired from her job at 9 years and 11 months, 1 month before becoming "vested" in her pension plan. She was therefore not eligible for company benefits. Are there any laws to stop companies from this? This was a common practice of this department store. We attempted legal recourse with them over this but couldnt in the end find a lawyer or agency that would take the case.

When did this happen. I believe the federal law has it so that you legally are vested after 5 years now. From http://www.dol.gov/ebsa/faqs/faq_consumer_pension.html

How long do employees have to wait to become members of a pension plan and to become vested in their benefits?

Generally, a plan may require a person to reach age 21 to be eligible to participate in the plan and to have a year of service. Vesting means the employee has earned a non-forfeitable right to benefits funded by employer contributions. Employees always have a non-forfeitable right to their own contributions.

There are changes to the two basic vesting schedules. Under the three-year schedule, workers are 100 percent vested after five years of service under the plan. The six-year graduated schedule allows workers to become 20 percent vested after two years and to vest at a rate of 20 percent each year thereafter until they are 100 percent vested after six years of service. Plans may have faster vesting schedules.

[Benster]

"Where is social security money currently invested?"

"It isn't."

Yes it is. It is invested in US savings bonds. To claim that that is not an investment because the government spends it is ludicrous: All investment is spent by the institution to which the money is loaned. That's the whole point!

Buying US savings bonds may or may not be a great investment, but at least it's a long-term solid investment with more security than the stock market. And it's also inside our own country, so it's like employee-ownership. The English, Canadians, Germans, Japanese, etc. who own large amounts of US debt may disagree with you if you believe it is not a good investment.

Further, US savings bonds are an investment in the financial, social and military security of the United States, because, let's face it: all this money goes into one big pot in the end, and it serves all the expenditures made by the federal government. What could be more important?

"The government gives you a promise to pay you a certain amount of money when you retire, provided you meet certain conditions (such as not being too rich to qualify to get your money back)."

What? Social security is not needs-based! Maybe it should be. That would help fix it's long-term viability. Where do you get these ideas?!?!

"For the average person who receives socsec retirement benefits, the payments represent a far smaller return on investment than would be expected on the basis of even below-average stock market performance."

But social security is not meant to provide for the average person. It's meant to provide minimum subsistence for the elderly person who, otherwise, would be very poor, and become a burden on us unless we helped him out.

"After adjustment, you're still getting a far better return on investment over the long haul."

You can't possibly be that clueless. SS is an income redistribution program. It goes to pay for people who never made enough money to save! Get it?!

"If you're too rich then you don't receive soc sec benefits, as I understand it."

You obviously don't understand it. You get your info from some right-wing propaganda mill.

[Zeluvia]

Okay I just watched a Democratic Committee hearing on Social Security on C-Span.
They invited the Republicans, who declined to attend, but had several economists, including some that were Republican, and some employees and trustees from Social Security itself.

This is what I got... there is a trust fund, and Social Security is running a surplus. Using the median projection which is based on a 0.6% annual growth of GDP, Social Security will run this annual surplus until 2013, at which time the Trust Fund will be huge...this is because the baby boomers are actually paying in way more than we are paying out.

From 2013 to 2042, there will be no surplus to bank, the fund will live on incoming contributions and interest from the Fund, which will be more than adequate to cover payouts.

In the medium projection, in 2042 the fund would have to either reduce benefits by 25% or make changes to the qualifications to recieve social security, as the first actual shortfall would occur then. In the High Projection, which assumes a GDP of 3%, this shortfall wouldnt happen until 2052.

It also came out that the government has borrowed against the Social Security Trust fund in the past. During Clinton, with the budget surplus, all borrowed funds were paid back and the fund was sitting pretty.

The Bush Adminstration borrowed from the Fund through bond issues to fund the tax cuts. If this money is not paid back, then Social Security will indeed be insolvent before the 2042 date.

Also, it was pointed out that the annual Social Security Statement that is issued to all citizens every year has been changed, and new language added about the insolvency of Social Security per the request of the Bush Administration. Both Social Security employees and of course Democrats felt this was a misuse of a factual government statement to advance the position of the Administration and create a scare tatic in the general populace.

Also, it was brought up that Model 2, or the most current Administration plan on the board, would not be as "free" to invest as rhetoric seems to make out. It would create a department of the government that would oversee the investments of the private accounts, with very little actual control by individuals over where these investments were put. This additional beauracracy created by the "private fund" idea, would basically invest payments made through payroll deductions into "the private sector" instead of into Treasury bonds.

Pulling Social Security investment OUT of Treasury bonds will actually INCREASE overall government debt. The government has dipped into the Social Security fund many times in the past, and in fact balancing the budget was so important for one reason to repair the loans that were taken from Social Security.

This basically moves alot of money out of investment in the US, and into investment in the private sector, which one would think would be good for the economy, however, government debt is never good. Government debt not owned by us is usually owned by some other country. Meanwhile, we have 401ks, which have already moved pensions to the private sector and IRA's which were supposed to supplement Social Security and move more saving to the private sector for retirement. Both of these options are nearly fully under individual control already.

There is a cap on what income level you must pay into Social Security, that is 89,000 this year. There doesnt seem to be any income cap on disbursement except from direct earnings from paychecks, in other words if you are still working, your Social Security benefit is reduced. Social Security takes into account no other income other than earned for capping benefits.

Approximately 30% of Social Security payouts are now to SSI program, which covers disablity, people not able to work, and pays the minor children and spouses of desceased people a living stipend. This stipend is payable till the children are 18, or if enrolled in college, till 24. SSI payouts are subject to the same earnings restrictions as Social Security.

The only figures I remember for recipients was CA, where for 850,000 people, Social Security or SSI was the sole source of income.

[Captain Ochre]

"Where is social security money currently invested?"

"It isn't."

Yes it is. It is invested in US savings bonds. To claim that that is not an investment because the government spends it is ludicrous: All investment is spent by the institution to which the money is loaned. That's the whole point!

The government's investment system is unique and would, I think, be illegal if adopted by any private investment firm.
Where are the US savings bonds that I've bought, BTW?

Buying US savings bonds may or may not be a great investment, but at least it's a long-term solid investment with more security than the stock market.

It'd be even better if I had them in my possession to give to somebody else if I so chose.

And it's also inside our own country, so it's like employee-ownership. The English, Canadians, Germans, Japanese, etc. who own large amounts of US debt may disagree with you if you believe it is not a good investment.

Further, US savings bonds are an investment in the financial, social and military security of the United States, because, let's face it: all this money goes into one big pot in the end, and it serves all the expenditures made by the federal government. What could be more important?

An ownership-based stronger economy that would do the same thing only better?

"The government gives you a promise to pay you a certain amount of money when you retire, provided you meet certain conditions (such as not being too rich to qualify to get your money back)."

What? Social security is not needs-based! Maybe it should be. That would help fix it's long-term viability. Where do you get these ideas?!?!

Perhaps you're correct and Donald Trump will get SS benefits. I get my ideas here and there. You?

"For the average person who receives socsec retirement benefits, the payments represent a far smaller return on investment than would be expected on the basis of even below-average stock market performance."

But social security is not meant to provide for the average person.

Then why does the average person pay into the system?

It's meant to provide minimum subsistence for the elderly person who, otherwise, would be very poor, and become a burden on us unless we helped him out.

And that person would have done far better by investing less money in the stock market than he's getting from "US Savings Bonds" that he does not keep in his possession.

"After adjustment, you're still getting a far better return on investment over the long haul."

You can't possibly be that clueless. SS is an income redistribution program. It goes to pay for people who never made enough money to save! Get it?!

Oh, I get that aspect of social security, thanks.
How do you justify taking that much money out of people's paychecks to redistribute to the small number of people who never made enough money to save, particularly when taking out that amount of money hinders that person's ability to wisely see to his own retirement?
The end result is that more people are reliant on SS, and the politicians get handed a nice leash with Joe Senior Citizen collared at the other end.
That's the ultimate point of these self-perpetuating income redistribution programs.

"If you're too rich then you don't receive soc sec benefits, as I understand it."

You obviously don't understand it. You get your info from some right-wing propaganda mill.

Non sequitur.
Thanks for reminding me what you're like.

[Captain Ochre]

Okay I just watched a Democratic Committee hearing on Social Security on C-Span.
They invited the Republicans, who declined to attend, but had several economists, including some that were Republican, and some employees and trustees from Social Security itself.

This is what I got... there is a trust fund, and Social Security is running a surplus.

The trust fund is on paper.

Using the median projection which is based on a 0.6% annual growth of GDP, Social Security will run this annual surplus until 2013, at which time the Trust Fund will be huge...this is because the baby boomers are actually paying in way more than we are paying out.

From 2013 to 2042, there will be no surplus to bank, the fund will live on incoming contributions and interest from the Fund, which will be more than adequate to cover payouts.

Makes you wonder why allowing younger folk to invest a portion of their SocSec deduction privately would be such a big deal, doesn't it?

In the medium projection, in 2042 the fund would have to either reduce benefits by 25% or make changes to the qualifications to recieve social security, as the first actual shortfall would occur then. In the High Projection, which assumes a GDP of 3%, this shortfall wouldnt happen until 2052.

Well what are we worried about, then? Party on!

It also came out that the government has borrowed against the Social Security Trust fund in the past. During Clinton, with the budget surplus, all borrowed funds were paid back and the fund was sitting pretty.

The Bush Adminstration borrowed from the Fund through bond issues to fund the tax cuts. If this money is not paid back, then Social Security will indeed be insolvent before the 2042 date.

Tax cuts do not need to be funded.
That's spin language. The budget needs to be funded, and expenditures need to be funded (assuming expenditures do not match the budget since that would be redundant). Tax cuts are not an expense.

Also, it was pointed out that the annual Social Security Statement that is issued to all citizens every year has been changed, and new language added about the insolvency of Social Security per the request of the Bush Administration. Both Social Security employees and of course Democrats felt this was a misuse of a factual government statement to advance the position of the Administration and create a scare tatic in the general populace.

Interesting. What was the specific change in language? That way we can judge if the opinions regarding the language are crackpot or not.

Also, it was brought up that Model 2, or the most current Administration plan on the board, would not be as "free" to invest as rhetoric seems to make out. It would create a department of the government that would oversee the investments of the private accounts, with very little actual control by individuals over where these investments were put. This additional beauracracy created by the "private fund" idea, would basically invest payments made through payroll deductions into "the private sector" instead of into Treasury bonds.

Scary! Sounds like a risky scheme.

Pulling Social Security investment OUT of Treasury bonds will actually INCREASE overall government debt. The government has dipped into the Social Security fund many times in the past, and in fact balancing the budget was so important for one reason to repair the loans that were taken from Social Security.

Huh?
1) Nobody's pulling SS investment out of Treasury bonds, AFAICS. It would decrease future investment in such bonds and
2) It is a non sequitur that government debt would increase, since increase economic activity results in increased tax revenue. If you want to fix government debt, the logical place to start is with (limits on) government spending.

This basically moves alot of money out of investment in the US, and into investment in the private sector, which one would think would be good for the economy, however, government debt is never good.

See above. Taxes paid are an investment in the government, and private retirement accounts will get you better return than government ones.
It's a no-brainer.

There is a cap on what income level you must pay into Social Security, that is 89,000 this year. There doesnt seem to be any income cap on disbursement except from direct earnings from paychecks, in other words if you are still working, your Social Security benefit is reduced. Social Security takes into account no other income other than earned for capping benefits.

I stand corrected, I think, though a citation would have been nice. I can't find anything to the contrary, however, so I accept that as being the case.

Approximately 30% of Social Security payouts are now to SSI program, which covers disablity, people not able to work, and pays the minor children and spouses of desceased people a living stipend. This stipend is payable till the children are 18, or if enrolled in college, till 24. SSI payouts are subject to the same earnings restrictions as Social Security.

What were the earnings restrictions on SS? Seems like you just got done saying that there were none.

Hopefully you'll balance your impressions by listening to Republicans discuss Social Security (maybe they'll even invite the Democrats).

[Zeluvia]

sure I will....

the actual language in the letter I cant find right now, but will look.

about the tax cut being funded by Social Security, god knows how they move this money on paper, but basically it was another bond issue secured by existing Social Security assets (which are also bonds) to cover the budget shortfall caused by the tax cut.

I think two things alarmed me the most, the plan being proposed not being under our control, and the possiblity of dismantling entirely our countrys main safety net for the eldery and disabled.

Also, I can see economic benefit from moving more savings into private sector, I would like to see the current IRA system enhanced more. This seems to make sense to me.
For instance, instead of cutting my taxes, or changing Social Security, give me larger tax benefit from IRA contributions and make IRA investing easier and way more flexible.
As long as I dont take the money out, I would like to be able to move it around and even invest it in the stock market if I so chose. Wouldnt that work too?

I dont see much difference between pulling money out of paychecks for social security and pulling money out of paychecks to go to another government agency to invest for me in the stock market.

I also think the dividend tax does need to be changed, however I think technically by existing tax code and theory, the dividends paid out should NOT be taxable to the company, only the the recipient of the return on investment.

Meanwhile, back in corporate tax law, there are some HUGE areas of tax theory that could use to be revisited. Depriciation, expense accounts, parachutes, options, advertising write-offs, foreign tax credits, other assorted credit systems.

[Teallaura]

From the SS act itself - gets kinda complicated after ... no, it's just complicated throughout.
If you need help sleeping, there's the link to the whole thing. (Yawn) Time for beddie bye for me!

http://www.socialsecurity.gov/OP_Home/ssact/comp-ssa.htm

Meaning of Income

SEC. 1612. [42 U.S.C. 1382a] (a) For purposes of this title, income means both earned income and unearned income; and—

(1) earned income means only— (A) wages as determined under section 203(f)(5)(C) but without the application of section 210(j)(3); (B) net earnings from self-employment, as defined in section 211 (without the application of the second and third sentences following subsection (a)(11), the last paragraph of subsection (a), and section 210(j)(3)), including earnings for services described in paragraphs (4), (5), and (6) of subsection (c); (C) remuneration received for services performed in a sheltered workshop or work activities center; and (D) any royalty earned by an individual in connection with any publication of the work of the individual, and that portion of any honorarium which is received for services rendered; and (2) unearned income means all other income, including— (A) support and maintenance furnished in cash or kind; except that (i) in the case of any individual (and his eligible spouse, if any) living in another person's household and receiving support and maintenance in kind from such person, the dollar amounts otherwise applicable to such individual (and spouse) as specified in subsections (a) and (b) of section 1611 shall be reduced by 33 1/3 percent in lieu of including such support and maintenance in the unearned income of such individual (and spouse) as otherwise required by this subparagraph, (ii) in the case of any individual or his eligible spouse who resides in a nonprofit retirement home or similar nonprofit institution, support and maintenance shall not be included to the extent that it is furnished to such individual or such spouse without such institution receiving payment therefor (unless such institution has expressly undertaken an obligation to furnish full support and maintenance to such individual or spouse without any current or future payment therefor) or payment therefor is made by another nonprofit organization, and (iii) support and maintenance shall not be included and the provisions of clause (i) shall not be applicable in the case of any individual (and his eligible spouse, if any) for the period which begins with the month in which such individual (or such individual and his eligible spouse) began to receive support and maintenance while living in a residential facility (including a private household) maintained by another person and ends with the close of the month in which such individual (or such individual and his eligible spouse) ceases to receive support and maintenance while living in such a residential facility (or, if earlier, with the close of the seventeenth month following the month in which such period began), if, not more than 30 days prior to the date on which such individual (or such individual and his eligible spouse) began to receive support and maintenance while living in such a residential facility, (I) such individual (or such individual and his eligible spouse) were residing in a household maintained by such individual (or by such individual and others) as his or their own home, (II) there occurred within the area in which such household is located (and while such individual, or such individual and his spouse, were residing in the household referred to in subclause (I)) a catastrophe on account of which the President declared a major disaster to exist therein for purposes of the Disaster Relief and Emergency Assistance Act[12], and (III) such individual declares that he (or he and his eligible spouse) ceased to continue living in the household referred to in subclause (II) because of such catastrophe; (B) any payments received as an annuity, pension, retirement, or disability benefit, including veterans' compensation and pensions, workmen's compensation payments, old-age, survivors, and disability insurance benefits, railroad retirement annuities and pensions, and unemployment insurance benefits; (C) prizes and awards; (D) payments to the individual occasioned by the death of another person, to the extent that the total of such payments exceeds the amount expended by such individual for purposes of the deceased person's last illness and burial; (E) support and alimony payments, and (subject to the provisions of subparagraph (D) excluding certain amounts expended for purposes of a last illness and burial) gifts (cash or otherwise) and inheritances; (F) rents, dividends, interest, and royalties not described in paragraph (1)(E); and (G) any earnings of, and additions to, the corpus of a trust established by an individual (within the meaning of section 1613(e)), of which the individual is a beneficiary, to which section 1613(e) applies, and, in the case of an irrevocable trust, with respect to which circumstances exist under which a payment from the earnings or additions could be made to or for the benefit of the individual. Exclusions From Income[13] (b) In determining the income of an individual (and his eligible spouse) there shall be excluded—



(1) subject to limitations (as to amount or otherwise) prescribed by the Commissioner of Social Security, if such individual is a child who is, as determined by the Commissioner of Social Security, a student regularly attending a school, college, or university, or a course of vocational or technical training designed to prepare him for gainful employment, the earned income of such individual; (2)(A) the first $240 per year (or proportionately smaller amounts for shorter periods) of income (whether earned or unearned) other than income which is paid on the basis of the need of the eligible individual, and (B) monthly (or other periodic) payments received by any individual, under a program established prior to July 1, 1973 (or any program established prior to such date but subsequently amended so as to conform to State or Federal constitutional standards), if (i) such payments are made by the State of which the individual receiving such payments is a resident, (ii) eligibility of any individual for such payments is not based on need and is based solely on attainment of age 65 or any other age set by the State and residency in such State by such individual, and (iii) on or before September 30, 1985, such individual (I) first becomes an eligible individual or an eligible spouse under this title, and (II) satisfies the twenty-five-year residency requirement of such program as such program was in effect prior to January 1, 1983; (3)[14] in any calendar quarter, the first— (A) $60 of unearned income, and (B) $30 of earned income, of such individual (and such spouse, if any) which, as determined in accordance with criteria, prescribed by the Commissioner of Social Security, is received too infrequently or irregularly to be included; (4)(A) if such individual (or such spouse) is blind (and has not attained age 65, or received benefits under this title (or aid under a State plan approved under section 1002 or 1602) for the month before the month in which he attained age 65), (i) the first $780 per year (or proportionately smaller amounts for shorter periods) of earned income not excluded by the preceding paragraphs of this subsection, plus one-half of the remainder thereof, (ii) an amount equal to any expenses reasonably attributable to the earning of any income, and (iii) such additional amounts of other income, where such individual has a plan for achieving self-support approved by the Commissioner of Social Security, as may be necessary for the fulfillment of such plan, (B) if such individual (or such spouse) is disabled but not blind (and has not attained age 65, or received benefits under this title (or aid under a State plan approved under section 1402 or 1602) for the month before the month in which he attained age 65), (i) the first $780 per year (or proportionately smaller amounts for shorter periods) of earned income not excluded by the preceding paragraphs of this subsection, (ii) such additional amounts of earned income of such individual, if such individual's disability is sufficiently severe to result in a functional limitation requiring assistance in order for him to work, as may be necessary to pay the costs (to such individual) of attendant care services, medical devices, equipment, prostheses, and similar items and services (not including routine drugs or routine medical services unless such drugs or services are necessary for the control of the disabling condition) which are necessary (as determined by the Commissioner of Social Security in regulations) for that purpose, whether or not such assistance is also needed to enable him to carry out his normal daily functions, except that the amounts to be excluded shall be subject to such reasonable limits as the Commissioner of Social Security may prescribe, (iii) one-half of the amount of earned income not excluded after the application of the preceding provisions of this subparagraph, and (iv) such additional amounts of other income, where such individual has a plan for achieving self-support approved by the Commissioner of Social Security, as may be necessary for the fulfillment of such plan, or (C) if such individual (or such spouse) has attained age 65 and is not included under subparagraph (A) or (B), the first $780 per year (or proportionately smaller amounts for shorter periods) of earned income not excluded by the preceding paragraphs of this subsection, plus one-half of the remainder thereof; (5) any amount received from any public agency as a return or refund of taxes paid on real property or on food purchased by such individual (or such spouse); (6) assistance, furnished to or on behalf of such individual (and spouse), which is based on need and furnished by any State or political subdivision of a State; (7) any portion of any grant, scholarship, or fellowship received for use in paying the cost of tuition and fees at any educational (including technical or vocational education) institution; (8) home produce of such individual (or spouse) utilized by the household for its own consumption; (9) if such individual is a child, one-third of any payment for his support received from an absent parent; (10) any amounts received for the foster care of a child who is not an eligible individual but who is living in the same home as such individual and was placed in such home by a public or nonprofit private child-placement or child-care agency; (11) assistance received under the Disaster Relief and Emergency Assistance Act[15] or other assistance provided pursuant to a Federal statute on account of a catastrophe which is declared to be a major disaster by the President; (12) interest income received on assistance funds referred to in paragraph (11) within the 9-month period beginning on the date such funds are received (or such longer periods as the Commissioner of Social Security shall by regulations prescribe in cases where good cause is shown by the individual concerned for extending such period); (13) any support or maintenance assistance furnished to or on behalf of such individual (and spouse if any) which (as determined under regulations of the Commissioner of Social Security by such State agency as the chief executive officer of the State may designate) is based on need for such support or maintenance, including assistance received to assist in meeting the costs of home energy (including both heating and cooling), and which is (A) assistance furnished in kind by a private nonprofit agency, or (B) assistance furnished by a supplier of home heating oil or gas, by an entity providing home energy whose revenues are primarily derived on a rate-of-return basis regulated by a State or Federal governmental entity, or by a municipal utility providing home energy; (14) assistance paid, with respect to the dwelling unit occupied by such individual (or such individual and spouse), under the United States Housing Act of 1937[16], the National Housing Act[17] , section 101 of the Housing and Urban Development Act of 1965[18], title V of the Housing Act of 1949[19], or section 202(h) of the Housing Act of 1959 [20]; (15) the value of any commercial transportation ticket, for travel by such individual (or spouse) among the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands, which is received as a gift by such individual (or such spouse) and is not converted to cash; (16) interest accrued on the value of an agreement entered into by such individual (or such spouse) representing the purchase of a burial space excluded under section 1613(a)(2)(B), and left to accumulate; (17) any amount received by such individual (or such spouse) from a fund established by a State to aid victims of crime; (18) relocation assistance provided by a State or local government to such individual (or such spouse), comparable to assistance provided under title II of the Uniform Relocation Assistance and Real Property Acquisitions Policies Act of 1970 which is subject to the treatment required by section 216 of such Act[21]; (19) any refund of Federal income taxes made to such individual (or such spouse) by reason of section 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit)[22], and any payment made to such individual (or such spouse) by an employer under section 3507 of such Code (relating to advance payment of earned income credit)[23]; (20) special pay received pursuant to section 310 of title 37, United States Code[24]; (21) the interest or other earnings on any account established and maintained in accordance with section 1631(a)(2)(F); [25] (22) any gift to, or for the benefit of, an individual who has not attained 18 years of age and who has a life-threatening condition, from an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 which is exempt from taxation under section 501(a) of such Code[26]— (A) in the case of an in-kind gift, if the gift is not converted to cash; or (B) in the case of a cash gift, only to the extent that the total amount excluded from the income of the individual pursuant to this paragraph in the calendar year in which the gift is made does not exceed $2,000; and [27] (23)[28] interest or dividend income from resources— (A) not excluded under section 1613(a), or (B) excluded pursuant to Federal law other than sections 1613(a). Eligibility factor:

2(a)(10)(A);

(10) if the State plan includes old-age assistance—



(A) provide that the State agency shall, in determining need for such assistance, take into consideration any other income and resources of an individual claiming old-age assistance, as well as any expenses reasonably attributable to the earning of any such income; except that, in making such determination, (i) the State agency may disregard not more than $7.50 per month of any income and (ii) of the first $80 per month of additional income which is earned the State agency may disregard not more than the first $20 thereof plus one-half of the remainder;[6] 1002(a)(8);

(8) provide that the State agency shall, in determining need, take into consideration any other income and resources of the individual claiming aid to the blind, as well as any expenses reasonably attributable to the earning of any such income, except that, in making such determination, the State agency (A) shall disregard the first $85 per month of earned income, plus one-half of earned income in excess of $85 per month, (B) shall, for a period not in excess of twelve months, and may, for a period not in excess of thirty-six months, disregard such additional amounts of other income and resources, in the case of an individual who has a plan for achieving self-support approved by the State agency, as may be necessary for the fulfillment of such plan, and (C) may, before disregarding the amounts referred to in clauses (A) and (B), disregard not more than $7.50 of any income;[4]

1402(a)(8);

(8) provide that the State agency shall, in determining need, take into consideration any other income and resources of an individual claiming aid to the permanently and totally disabled, as well as any expenses reasonably attributable to the earning of any such income; except that, in making such determination, (A) the State agency may disregard not more than $7.50 of any income, (B) of the first $80 per month of additional income which is earned the State agency may disregard not more than the first $20 thereof plus one-half of the remainder, and (C) the State agency may, for a period not in excess of 36 months, disregard such additional amounts of other income and resources, in the case of an individual who has a plan for achieving self-support approved by the State agency, as may be necessary for the fulfillment of such plan, but only with respect to the part or parts of such period during substantially all of which he is actually undergoing vocational rehabilitation;[4]

1602(a)(14)*;



(14) provide that the State agency shall, in determining need for aid to the aged, blind, or disabled, take into consideration any other income and resources of an individual claiming such aid, as well as any expenses reasonably attributable to the earning of any such income; except that, ......**

** edited for space

[Zeluvia]

Yeah and I did get it wrong, my father died and I received Social Security while in college, but that program is discontunied. Dependents no longer receive payments till 24 while in school. The cut off date is 18

Basically Captain Ochre is right...it is on paper. There is a Trust Fund of Treasury Bonds, but the government owns the liablity on these bonds. In other words, the government is indebt to Social Security. Once the surplus stops in 2018 or 2013 (depends on which projection and whose), the government has to pay the interest on the bonds, which it seems it DOESNT actually do now with cash, just on paper. The issue seems to be that right now social security MAKES money for the government,

Now I am wondering what percentage of Treasury Bonds are in the Trust fund?

Also, what happened is that the surplus money collected from the baby boomers above and beyond Social Security payouts has been credited to the Trust Fund, but in most years this surplus was actually rolled back into the general budget and spent.

One suggestion I liked, was just allowing Current Social Security investments to be diversified. This seems to do the same thing Model 2 does, without reducing the amount of income coming into Social Security, doesnt create another agency, doesnt make more money for wall street brokers.

Apparently alot of other countries have this kind of retirement plan.

Britians plan had a high end mangement and admistration load, that was eating 40% of contributions. It was also badly designed, and the private companies that offered the plan did some unscrouplous things, causing the government to have to step in and regulate management fees and pay back 10 million dollars lost because of unclear choice selections.

Chile's president told his people during one extremely bad stock dip, not to retire till the market improved.

Meanwhile Captain, I wish you would investigate the allegations the Administration has directed Social Security department employees to specifically tell citizens as part of their information disbursement about Social Security that Privatized Accounts are the ONLY way to save Social Security. Two 30 year employees of Social Security were on the committee with excerpts from the SS intranet of employee directives to discuss Privatization as the only way to save SS, even though they were told not to use the word "Privatize"

Also, was someone who said "Social Security is the soft underbelly of the welfare state"
but I cant find out who exactly is saying that.

[Ben Franklin]

Well, looking at the big picture, the rich can't get Social Security (as Ochre mentioned), and the benefits computation is pretty complicated, but I'd say that SS is, in part, a wealth redistibution scheme. An interesting thing about SS is that benefit levels are affected by other pensions. For example, let's say that you're drawing a national pension from Japan of Y50,000/month. Simply put, that amount ($500 for argument's sake) is deducted from your computed SS benefit of, say $1000, so you get $500 (not $1000) from SS.

As for the market effects of SS privatization, I say it's better to invest that money in mutual funds, rather than individual stock picks. I'm pretty sure the government will create it's own managed funds for the stewardship of SS (as it now does with the Thrift Savings Plan), so don't put your broker on speed-dial just yet. Lastly, retirement investment strategy is long-term, so SS will most likely be a sheep-herd of money following the large cap companies (like the S&P 500), so don't anticipate any great shakes if/when SS is privatized.

Of course, when the economy tanks, so will SS, so this really is a losing plan.

[Zeluvia]

Actually it wasnt designed to be a wealth redistribution plan. The idea that earnings are only taxed for Social Security up to a ceiling of $89,000 and the rich don't recieve benefits is part of how this keeps from being wealth redistribution. The fact is, the original idea was a earned credit toward retirement insurance.

Historically up to 90% of the median wage was the tax base. We are currently only taxing up to 85% of the median wage.

However, the SSI piece is slightly different since it covers disabled workers and orphans. This clearly isn't an "earned" insurance plan, but an insurance plan nonetheless.

Compared with Medicare, Medicaid, and welfare, Social Security as an insurance plan makes quite a bit of rational sense. Too bad we had that pesky baby boom.

[Benster]

[QUOTE=Captain Ochre]The trust fund is on paper.

So is my bank account! And yours! What's the point? The govenment will have to pay back the money it has borrowed from social security. If it can't, by raising taxes, then SS will have to reduce payments. Big deal. Where's the crisis? Bush is arguing for abolishment by saying "You can't trust us...we spent all your SS money on this unnecessary war. So go to private accounts instead!" Ludicrous.

"akes you wonder why allowing younger folk to invest a portion of their SocSec deduction privately would be such a big deal, doesn't it?"

People who can afford to already invest in private accounts. Many will never earn enough...EVER...to invest money! They can barely get by week to week. What about them?

"Tax cuts are not an expense."

You need a basic class in macroeconomics, dude. Tax cuts are an expense, or an investment in the economy. They represent giving back money that WAS due to the government, so they are viturally indistinguishable from government expenditures or investment in the US economy. That's the whole argument for them!

"If you want to fix government debt, the logical place to start is with (limits on) government spending."

I can barely keep up with the non-sequiturs! In order to keep an economy healthy, you have to alternate periods of taxing and saving (during booms) with tax cuts and invesment (during recessions)! Think about it.

"Taxes paid are an investment in the government, and private retirement accounts will get you better return than government ones.
It's a no-brainer."

That is is...in some way...

Taxes paid are the primary fiunding for the government. They are NOT investment. Tax CUTS are investment. Taxes SPENT by the government are investment. Taxes paid by us are NOT an investment in the economy until they are spent.

"hat were the earnings restrictions on SS? Seems like you just got done saying that there were none."

There are none. That is why we have to make some, and save SS...It's a no-brainer!

"opefully you'll balance your impressions by listening to Republicans discuss Social Security (maybe they'll even invite the Democrats)."

"ou won't find D's or R's discuss the issue honestly...yet.

[Benster]

"Well, looking at the big picture, the rich can't get Social Security (as Ochre mentioned)..."

What are you talking about? Social security payments are not tied to wealth!