yes they cant be insolvent but they can stop paying you by changing the age you collect to 125 plus decide the rate of compound interest
Australia successfully moved 99% to private pensions, when the gov told the population 40 years ago that there wont be a gov pension in a few years so here is what you need to do.
1 Like
yes unique issue in the USA where the banks tell the gov what to do and are never held accountable.
I agree with you pretty much on every point you make here. But your last point alone makes a state’s association joint SSA system worthwhile. The rich states are regularly held up for pork by the poor states partly by wrangling over the SSA.
If some of the rich states form their own joint SSA that leverage stops, and the richer states can hold on to more of their own money. For every dollar I pay in federal taxes my state only gets 83 cents back. That disparity will dwindle if SS is no longer a political football.
A joint SSA of richer states can also include poorer states, but the natural inclination would be for those states to all be more aligned politically, and therefore more inclined to seek agreement on SSA matters. And SSA could not be used as leverage for pork between the states.
An SS pension fund investment arm would be set up similar to the Alaska Permanent Fund, or other Public Pension funds.
Everyone would get their standard SS check on time every month no matter what.
I don’t know the details of how state employee retirement funds like CALPERS do that, but they do. CALPERS is one of the largest institutional investors in the US.
As I recall, the Alaska Permanent Fund is only allowed to invest half its assets in stocks and bonds. It’s not allowed to invest in Alaska. Oil revenue get deposited into the Permanent Fund, that money gets invested. The size of the annual Permanent Fund checks varied based up average investment returns over the previous three years. At least, that’s what I recall.
As it is now, SS can only loan money to the US government at very low interest rates.
In short, SS checks would come from past investment earnings, not from current earnings or principal. Do a stock market crash would have no effect of monthly checks to SS recipients.
Being more macro - both parties use the “debt” and the imminent insolvency of SS as wonderful political weapons- and have for 50 years. Because they work
And as long as 99 pct of the citizens of this country continue to believe the US government has a checkbook like a household it will continue to work.
This a bit of a windmill for me that I can’t stop charging
4 Likes
Plus anything associated with the Federal Government is subject to the Freedom of Information Act adding layers of transparency and accountability.
The shadiness of private enterprise driven exclusively by bigger and bigger profits at the expense of all else is definitely not the type of fox you want guarding the hen house when it comes to your retirement savings.
2 Likes
Private and managed by who? The US SS system also provides disability coverage and survivor benefits for minors. How does Australia mandate a similar coverage or do they?
Kind of ironic that the State of Alaska has all this oil money to invest for their residents. They basically socialized the state’s oil resources making it a people’s resource such that the people of the state get a cut off the top of the oil revenues. That’s called socialism folks; not that I’m against it necessarily, but we should call it what it is.
Meanwhile Alaska is also one of the top states in federal funds received per person.
Perhaps those Alaskans aren’t such rugged individualists after all?
2 Likes
Appalachia by the sea.
The problem with that is how do the states choose who to ally themselves with? I can just imagine what would happen if Texas and the southeastern states allied themselves and managed their social security. They would call it ‘socialism’ and at best under-fund it if not abolish it. Just as they refuse to accept Medicaid funding which results in uninsured people due to political beliefs. Best to leave the SSA under the federal umbrella.Currently it’s a third rail that most politicians won’t touch.
That’s their problem, not mine.
But I do also remember Ronald Reagan warning his fellow GOP members: SS is the third rail of politics. Touch it and perish.
The richer states would naturally choose to ally with each other, as long as they have the same political leanings. That core of richer states would also invite less rich, smaller states with similar political demographics. Up to a point, the more states the better, to share financial risk.
So, as an example, a natural association would be Washington, California, Maine , New York, New Jersey, Connecticut, Vermont. Maybe Oregon.
The Australian Government runs a pension system that is universal but it is means tested. Basically you have to be on the bones of your arse before you can receive it. Every employee pays in to a pension fund and the employer pays in the same amount and the money is held in a personal account. Here powerabout has more up to date info than I do as it is some years since I worked in Aussie.
I remember that if you were earning over $175K you could up your contributions to 15% and you got a tax credit. I think it was 8% employee and 8% employer. There is only a small number of Banks and Financial Institutions and they are rigorously controlled by the Australian Federal Government.
If you worked in the Offshore it made for a very tidy sum at the end.
The medical that the Flying Doctors HQ in Perth, Western Australia was extremely rigorous with a Plank Test, running on a treadmill while they measured oxygen use and a grip test. As a 68 year old at the time I was congratulated on passing and I think the sole reason was I did farm work in my time off. I am sure that a couple of years later it would have been a fail considering eyesight and all.
Then there is the Norwegian scheme. Everyone gets a comfortable retirement.
That’s about the same as in the USA:
“…Social Security is financed through a dedicated payroll tax. Employers and employees each pay 6.2 percent of wages up to the taxable maximum of $168,600 (in 2024), while the self-employed pay 12.4 percent…”
Raise it from 6.2 to 8% and the problem would be solved for quite awhile.
Removing the $166,000 salary cap would also greatly improve funding. Let those CEOs and ball players making $10 million a year be a real source of revenue for SS.
The large baby boom generation that is retired now is consuming a lot of SS with smaller generations currently paying in to keep SS funded. That will be over in another decade after most of the boomers have died off.
The next generation to retire is smaller, and the generation after that much smaller.
SS will be fine, but it could be much better if it were allowed to invest at market rates like all other public and private employee pension plans.
3 Likes
This… or remove the caps altogether.
6 Likes
what hogsnort forgot to mention was that law says the pension money does not go to the gov.The money goes to defined super funds.Its your account, your money.
Employer tips in 11.5% of your basic salary
Welfare is a separate thing, just paid from gov funds
They do charge you for medicare 2% as its free healthcare in OZ
Aussies have almost 4 trillion dollars in these funds now
The difference is there is a pot of assets versus the typical gov scheme where there is no pot so payout is from current income.
If a few Aussies have 4 trillion for pensions you can now see how much trouble the rest of the world is in.
That sum has been created in the last 35 years or so since it became law.
1 Like
Thanks for bringing me up to date. I think that Norway has 7 trillion dollars in theirs but there is only 5 and a half million of them. Population approximate.
I am wondering. Do “maritime” unions pay into SS or into a union retirement fund? I know railroad workers pay into a railroad retirement, and the feds are drooling, wanting to get their grubby paws on that money.
Which is why socialist governments always have their eye on this pot of gold for ways to extract their endless demand for other people’s money.
If they can’t get the cash, they demand the funds be ‘invested’ in things they dream about like ‘social housing’, ‘clean energy’, and ‘greening the environment’ none of which are sensible investments for other people’s money.
Socialism doesn’t work unless capitalism generates the cash first so socialists can steal it.
1 Like