Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (3913)	8/20/1999 11:21:00 PM
From: jttmab	Read Replies (1) \| Respond to of 769670

Michelle, You're combining a number of points that individually are valid, but maybe shouldn't be integrated. I'll largely restate your points but put together a little differently. I think it is true that lower income persons receive more benefit that high income earnings. A variety of reasons, high income earnings (non-wage) pay no FICA tax; a high income earner (wages) will pay FICA up to somewhere around 70,000 of income. Presumably a high income earner will have ample retirement income which will reduce the social security benefits. A SS system which invests money at a higher rate than T-bills (which is where the SS surplus goes as I recall) will very likely result in a better return. So on to the "different" system. Up front, I'll say that conceptually, I have no objections to modifying the SS System. But I have questions and I like to decompose the effects and possible ramifications. Depending on whose estimates and economic assumptions you use, the current SS system should be fully self-funded to something like 2047. After that there is a shortfall that likely has to come out of the general fund. Any transition to a replacement system will have very significant transition costs; we should know what those costs are and when and how they affect the budget. Most commonly, (but not always) the individual should have control over their investments in their accounts. Sounds good. Now how are we doing to handle a couple of situations. One situation is the idiot that invests their retirement in ...internet stocks or their equivalent and loses their retirement. We could say, too bad that's their problem. I suspect that the first picture of an old homeless person who has lost everything, will cause us to find government funding. Is this significant? Don't know. Do we plan for it in the operating fund and for how much? Second contingency, we know that the market goes up and down and in the future while the trend is up, it will have it's corrections and crashes. But their is a continuous stream of retirees. So, for example, let's say there is a major economic crash in 2087 the invested portfolios are cut in half or more. For those people that are retired and retiring in the near term is this catastrophic? Probably for a good number of them it will. What's the contingency? If any. Separate but related subject. I started playing with a couple of graphs; y=.075x, for x=0,70,000 and y=.17(x-36,000) for x=0,infinity. They are very interesting, particularly looking at the intersection points and the integrals under each. (I cheated I'm mentally/visually doing the integrals). Sketch them out. I would be interested in your observations. Best Regards, Jim