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 : The Trump Presidency -- Ignore unavailable to you. Want to Upgrade?

To: Lane3 who wrote (69729)	5/3/2018 6:47:51 PM
From: neolib	Read Replies (1) \| Respond to of 356414

Can you conceive of a system (like SS happens to be close to) where current benefits paid out are 100% from current payroll taxes collected, and yet the benefits paid out are rigidly based on what the beneficiary paid in over time with a predefined effective investment income? The claim that current payments are based on current withholding and that benefits are based on what you paid in are not in the least bit contradictory. Perhaps that is what you are not thinking could be the case?? The only hazard with such a system is correctly projecting interest rates and population dynamics, assuming you want to keep the benefits formula and the withholding formula constant over time. If you are willing to adjust one or both, it can work without great projections of either interest rates or population dynamics. SS is a bit in between it tries to project population dynamics and inflation, but both the benefits and the withholding have changed over time. Which can nicely produce a system where current payments = current income, and yet your benefits are 100% defined by what you paid in per some formula.