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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: benwood who wrote (26031)	2/8/2005 1:07:31 PM
From: GraceZ	Read Replies (3) of 110194

one said if I never worked again yada yada and the other assumed I'd make the last year's wage for the next 22 years or whatever, and you're right, the former said it would be a much lower payout if I didn't work again. What line are you looking at that says that? The disability line? From the statement: What we assume- If you have enough work credits, we estimated your benefit amount using your average earnings over your working lifetime. For 2003 (and your earnings up to retirement), we assumed you'll continue to work and make about the same in future years as you did in 2001 and 2002. We also included credits we assumed you earned last year and this year. What will Wall Street's cut of the SS pretend privatization be? Less than the government's cut. Those guys over at SSA were big clients of mine for years. I can tell you I've gotten back everything I paid into the system working for them with dumbell cost over runs and reruns because some bozo over there forgot to edit the copy or left off an important logo or can't write correctly in Spanish. Nice people but their pay isn't based on performance by any means. Right now SSA costs you 2-3% a year, that is the cost of administering the program. But let's not let people make a reasonable market return with their retirement saving because someone in the private sector might make 1% helping them make it. Maybe we should pass a law they should offer "free" advice. Not all things would remain equal, the real cost in keeping the system the same as it is now is the growth in the economy that wouldn't occur as more and more of the GDP gets diverted to transfer payments to individuals (right now 60% of all Federal outlays and 12.4% of GDP are payments to individuals and we aren't even into the meat of the Boomer generation). Money we now transfer to individuals would be sent to savings (read available for investment) rather than current spending. Private accounts would divert current consumption (mostly government spending) to investment in the private sector. If there is one thing this country is short of it is savings diverted to investment. Raise that upper limit significantly and I can guarantee an explosion in S corps and LLCs so higher income wage earners can avoid employment taxes. Tax increases are never neutral to the economy. Right now the top half of filers pays 94% of all payroll taxes, how much more do you think they will stand for? The tax receipts might actually wind up being lower. A high enough return on tax avoidance makes sheltering your income cost effective. Most of my clients do this already because they are all self employed in a bracket where they max out SS payments. So they pay themselves a very small wage and take the rest of their earnings as dividends. But with many Americans thinking the stock market returns 20% or more compounded annually, it will be an easy sell. Easy sell, you have to be kidding. The public is still terrified of the stock market right now even after a two year rally.

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