Wednesday, April 16, 2014

Social Security is not a federal benefit


The politicians are now referring to SOCIAL SECURITY as the Federal Benefit Payment. This is not a benefit … it is eamed income. Not only did we wage earners contribute to Social Security, our employers also contributed on the wage earners behalf. It totaled 15 percent of our income before taxes, and if you averaged $30,000 per year over your working life, you have nearly invested $180,000 in Social Security.

If you calculate the future value of your monthly investment in Social Security ($375 per month, which includes both you and your employer’s contribution) at a meager 1 percent interest rate compounded monthly, after 40 years of working you would have a personal investment of more than $1.3 million dollars saved.

Upon retirement, if you reduced your investment by only 3 percent per year, you would receive $39,318 per year, or $3,277 per month, which is almost three times more than today’s average Social Security payment of $1,230 (Google Social Security Administration information).

And, your retirement fund would last more than 33 years (until you are 98 years old, if you retire at age 65). I can only imagine how much better most average-income people could live during retirement if our government had just invested our money in low-risk interest-earning accounts.

Instead, the politicians in Washinglon pulled off a bigger Ponzi scheme than Bernie Madoff ever thought of. They took our invested money and used it elsewhere, conveniently forgetting that it was “our” money they were taking, never considering a referendum to ask us, the contributors, if we wanted to lend them our money.

We, the contributors, did not receive interest on the debt they assumed, and recently began inforrning us that their invested money will not support us for very much longer, insinuating it was our fault they misused our investment.

Now, adding insult to injury, the government is calling Social Security a”benefit,” as if we never worked to earn every penny of it. Just because they “borrowed” the money, does not mean that our investment in Social Security was a charity.

It is time to make a stand. Inform our legislators that we have earned our rights to Social Security and Medicare and it is their responsibility to insert some sense into our government and find a way to keep Social Security and Medicare funded, for the sake of the 92 percent of our population who need it. And, call it what it really is, our earned retirement income.


Letters to the Editor


Discussion | 8 comments

  • Phil VeerkampMarch 14, 2013 - 11:07 am

    Ray's assumption, "if you averaged $30,000 per year over your working life" is a bit optimistic. - LINK - California was the 11th wealthiest in the United States of America, with a per capita income of $22,711 (2000) - Keep working you guys & gals. Th' Missus and I really do need you to continue supporting us in th' style to which we have become accustomed. We've already burned though a good deal of our SS "contribution". Thanks for your support - really!

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  • DeeMarch 14, 2013 - 12:31 pm – The Obama administration is planning new cuts to Medicare, a federal regulatory filing reveals, cuts that could mean higher premiums or seniors losing their coverage altogether. The new cuts come in the form of a planned reduction in the reimbursement rates the government pays to insurance companies that operate Medicare Advantage plans, which are services administered by private for-profit or non-profit providers that offer additional services than can be found in traditional Medicare. *******The Obama administration already plans to cut the Medicare Advantage program by $200 billion as part of Obamacare. However, the proposed reductions it announced in February are new, and will cut the program in addition to the planned $200 billion in Obamacare cuts, most of which are delayed in 2014.--------Well that should help the Seniors obtain health care.

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  • James E.March 14, 2013 - 1:35 pm

    In 1972, Mr. Kaiser and President Nixon got together and decided how a private business could tap into Medicare. The private business would get paid more than Medicare rates and for 40 years they have been. So, now bringing their Medicare reimbursement rates closer to reality bring cries that Medicare is being cut. Just the opposite, as it cuts Mr. Kaiser's (long dead, of course) excessive drain from Medicare funds. If Kaiser, et al., now drops patients because of reality based compensation, those patients will still have traditional Medicare. And, the cuts must be good because Representative Ryan's new budget retains the $700B cuts. Bad when Ryan comments about them in public, but good when he needs them to shore up his proposed budget. Wait, there's more -- he wants to void Obamacare, but still retain the $700B for his "budget." Alice in Wonderland.

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  • James E.March 14, 2013 - 1:47 pm

    Well, folks, that's my contribution to the site for Thursday, March 14, 2012. I'm going to now go give Mr. Fred some love and get some love in return. Just an old guy and his dogbert.

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  • Jim RiordanMarch 15, 2013 - 10:44 am

    Col. James, hope Fred is recovering well. In 1959, my dad gave a speech before the house of "Representatives" telling them that the way they were structuring SS it would just turn into a money pot from which they could steal money and never repay it. I still have the report. Every prediction he made then has come true. We paid into Social security all our working lives. For government pukes to steal from it as if it were their money was unconscionable in 1959 and still is today. Let the pigs find another trough

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  • James E.March 15, 2013 - 3:53 pm

    Mr. Riordan, Mr. Fred is doing much better -- he gets his second chemo pill this evening. Now, what the government did when they took our Social Security money and spent it elsewhere, we call embezzlement. However, the government calls it reprogramming of available assets.

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  • TerryMarch 15, 2013 - 8:45 pm

    Mr. Sherwood, you have an error in your letter. The SS tax is 2 x 6.2% for a total of 12.4%. The total FICA rate is 2 x 7.65% or 15.3%. The difference (2.9%) is the disability and survivors benefit. My calculations vary some from yours but the end result is still much better than the government’s. First I assume that one starts working at 22 and retires at 67 for a 45 year career. The beginning salary is $15K. Inflation raises that salary by 3% each year with an ending salary at 67 of $56.7K. The SS tax is collected at 12.4% and is invested at a very modest 4%, just 1% over the inflation rate. At 67, the retiree has $405.4K. This principle continues to earn money at the 4% rate. Payments are made to the retiree starting at $14,760/yr which is the current average SS payment. This payment increases annually at the inflation rate of 3%. When the retiree reaches 100, he collecting $38K/yr and still has $9K of principle left. So readers, please take a hard look at these numbers. Also consider it you die early, SS keeps any balance. In a private system, your dependents inherit the balance. Anyone can do these calculations. Pick starting conditions and work through the math. A 4% return is very conservative. Every percentage point above 4% will increase the savings dramatically. For example, 5% return yields $515K in savings at 67 and you can add another $300 to the payment the first year and still live to 100. SS is a rip off and a Ponzi scheme. I would like to propose the follow. First let’s write off the SS Trust Fund. It is a figment of our imagination as we have borrowed from ourselves and spent all the money. The only way to repay it is to increase taxes, borrow the money from someone else, or print the money hence rob it from savers. It would be more honest and to write off the $2.4T thus lowering our published debt. Once this lie is out of the way, then we can have an honest discussion on SS. Next I would propose that we privatize SS for the young people allowing them to divert their 6.2% to a 401K plan or an IRA. Any revenues required to sustain current and future retirees on the current system would be funded by diverting all of the taxes collected from current distributions of IRA and 401K plans including any taxes collected from converting said plans to Roth IRAs. I am not sure if this is sufficient to cover the current and near term needs. If not then I would raise the salary cap on the employer portion of the SS tax. In no case should any of these funds be put into the General Fund or be borrowed by the Treasury for other business. Any surplus funds should be returned to the people via diversion of the employer tax to the individuals 401K or IRA accounts. Thus as the boomer generation moves through the system, the old age annuity part of SS will die a natural death.

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  • Jim RiordanMarch 17, 2013 - 12:54 pm

    Col. James . . wishing you and Mr. Fred the best. Very painful to watch our "best friends" hurt.

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