401K "Newsletter" dismisses claims of crisis!

[dandrhesse]

The insert that is sent out regularly with our 401K statement with "investment" advice had a piece entitled "The Health of Social Security" which reads in part:

"The Baby Boomer generation will impact Social Security. Fortunately, lawmakers foresaw the impact several decades ago and instituted the Social Security Amendment of 1983...
So where are we today?...Even without making any changes(such as raising taxes or altering the benefit structure), a pay as you go Social Security would be able to cover about 81% of its obligations until 2100, and 71% after that."

This publication stands firmly behind the Democrats, now that's a switch!

[iamjoy]

1. Not So Fast

So, we're only going to get 81% of our anticipated benefit? For some people that could be the breaking point between eating and not eating.

[GregD]

2. 95 years from now

Imagine what will change between then and now. Not only economies, but every aspect of how we exist and travel on this planet.

[dandrhesse]

3. But this is without doing anything and that is what the Dems are saying

so if we do raise the ceiling on the Social Security tax from 90,000 up to a higher cut-off point, that alone would take care of the gap. I have had many people say publicly that they would be in favor of that. In fact at a meeting with our Congressman a woman who is in that bracket stood up and said she would be gladly willing to pay "her share" up to whatever cut off point including her full earnings ( i don't know how much over 90K she makes) if that what was necessary to insure that social security stays intact to take care of those who dependend on it.

There was an overwhelmingly postitive response to her statement. People in general are willing to sacrifice to keep the program intact, they have not been asked to do so.

Bush is insisting it is in need of immediate fix and said he will entertain all offers but he won't raise the ceiling!

At the same meeting a Republican Investment Counselor stood up and said, let's make something real clear, the basis of the Presidents argument for personal accounts is wrong! It is not "your" money. The money you pay in pays for retiree benefits, that is the way it has always been so there is no 4% or whatever of "your money" to invest in these private accounts. It is a false premise. From a Republican Investment counselor!
that was sweet!

[REACTIVATED IN CT]

6. Raising the cap

One thing to keep in mind about the $90,000 cap is that it is not on total gross wages.

Contributions to Sec. 125 Plans like Flex Benefits, Dependent Care and Sec 132 PreTax Commuting are exempt from SS tax.

Say someone is making $90,000 as year and elects to contribute $5000 to Dep Care, $5200 for Medical insurance, $1,800 for Unreimb. Medical and $1500 for commuting. Their SS/Med. wage base is only $76,500. Thats $13,500 not being taxed for SS/Medicare. At 7.65% thats $1032 not going to those programs plus the employer's matching $1032

Maybe those Sections s/b revised so that the benefits are not SS/Medicare exempt ( or some limits on exemption) - just Federal tax exempt like 401k contributions are.

Thoughts?

[dandrhesse]

9. My thoughts are that most people seem to be willing to make whatever

sacrifice necessary and they are not be asked to do that, instead we are looking at a plan that makes no sense and will not save the problem. If left to the masses it would be solved.

[Igel]

8. Yes, but it views Social Security without regard to its debtors.

You could use what's said there to argue that the deficits are immaterial. After all, the SSA still has the assets. But it masks the real problem, which isn't the 81% (or whatever the number du jour is) limit as of 2043 (or whatever the year du jour is). That's 40 years away, and we have to get there first.

Unfortunately, dems and repubs have tacitly decided to each use the same words, but with different meanings, all the while keeping a straight face. They assume nobody notices that they're in the same room, but not even attempting to talk to each other.

When the SSA has to pay out those assets in the form of benefits, one of several things will have to happen. Either more taxes will be taken to cover the repayment of debt to the SSA, or the government will have to issue more debt to "swap out" the debt owed to itself, and put the debt on the books (this is Greenspan's "unfunded liability", since debt owed by the government to itself is both asset and liability, and cancels out on the balance sheet). Of course, a combination is possible. If continued increases in national debt and higher taxes aren't palatable, either benefits will have to be decreased, or funding will have to be shifted to social security from things like military, other social welfare programs, or research. (Similar problems, arguably greater in some respects, arise with regard to health care issues.)

* doesn't want to deal with this issue. For one thing, it highlights his deficit borrowing. Dems don't want to deal with it. For both sides it raises the spector of higher taxes, reduced spending on pet or popular projects/services, or reduced SS benefits. There's enough suckiness to ruin everybody's reelection prospects.

[Pepperbelly]

5. that 81% will STILL equal a ...

greater dollar value than today.

And 81% DOES NOT equal getting nothing at all nor does it justify tearing the house down to fix a leaky faucet (Thanx to AARP for that one.)

[ClintonTyree]

4. NO WAY...

our Pretzelnit says it's BANKRUPT on 2041. Who are you going to believe, some financial guru with all the facts, or our Pretzelnit? What kind of American are you? :grr: You LIEberal traitors are getting me fired up this morning! ;)

[wishlist]

7. This has been the standard govt mantra from SSA until Bush changed it

The non-crisis scenario is in line with the SS actuaries and trustees and the responsible reasoned opinion of the Social Security Administration until Bush's RWing agenda perverted it with crisis rhetoric.

Amazes me that so far I have seen no mention in the media of the absurdity of Bush's plan to reduce benefits for most people from 25% to 50% in order to save it, when the program is solvent for several decades not requiring any cuts if left alone, and can still pay out most of its obligations with less of an overall reduction than what Bush is proposing, even when the trust funds have been exhausted.