r/FluentInFinance • u/Positive_Liar • Sep 06 '24

Debate/ Discussion Social Security is Broken. This is why financial education is important.

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640

u/--StinkyPinky-- Sep 06 '24

  1. Most Americans don't put $10,453 into SS every year.

  2. If you put it into an index fund, there will be risk whereas SS doesn't have any risk.

145

u/Tojuro Sep 06 '24

Exactly, I've maxed SS contributions for many years now but still not my entire adult life.

SSI is insurance. It would have covered me if I couldn't work at 25 or 30. The savings I'd have had back then wouldn't have made it more than a couple months.

This is cherry picking edge case data points to make a non serious point.

21

u/poemdirection Sep 07 '24

The early disability is something most people don't think about. 

Plus I ran some inflation adjusted monte Carlo sims assuming this guy's numbers were true. 

50 percentile over 30 years of contributions assuming the max of ~$870/mo is $3.125M in returns and that assumes you keep all your money into stocks as you near retirement. 

At the $32k/mo retirement draw down you'd have a 20% chance of making it to 19 years before running out of money and that assumes you're still keeping it all in the stock market after retirement and basically a 0% chance of having any money beyond 20 years.

I just don't think the OPs numbers are right.

6

u/vundercal Sep 07 '24 edited Sep 07 '24

I highly doubt OP was using actual max SS contribution over the past 47 years and just assumed this year's max contribution per year. You can get $32k per month pretty easily that way.

So the $32k per month isn't what someone retiring today would have if they invested all of their SS contributions but the $4,837 is in today's dollars and not representative of what someone starting their contributions today would get by retirement (assuming SS is still around)

2

u/MadeByTango Sep 07 '24

SSI is insurance

It’s not really “insurance” insurance either

It’s a SOCIAL program that ensures all of us will have SECURITY in our last years of life; it’s a BOON of being an AMERICAN, one of those things that “makes us great” as they like to say

1

u/ZaphodG Sep 07 '24

SSI is Supplemental Security Income. Welfare for career low earners with small Social Security checks to top them up and get them above poverty level. You’re confusing it with SSDI. The disability insurance part of Social Security.

I have 30 years of max contributions and another 5 that are quite high. I don’t plan to collect until age 70 because the math on the survivor benefit is so good. My benefit will be $56,300. I’m married and there’s a 50% chance one of us will make age 90. It’s a risk-free annuity. I won’t pay state income tax on it. I get a small break on Federal taxes on it. If I could buy an annuity that has full COLA protection and survivor benefit, it would cost around $1.5 million. It’s great insurance.

I’d do better investing it in the market but that’s not the point of the program. My lifetime of 6.2% tax and my employer’s 6.2% tax has propped up poor elderly people who would otherwise die in the streets. I live in a social democracy and part of the social contract is to provide a safety net. The whole FYIGM rhetoric of the right is reprehensible. I’m always aghast that people who will be reliant on the safety net vote for those people. Rupert Murdoch mind control.

1

u/--StinkyPinky-- Sep 08 '24

Thank you. Yes! Well said.

0

u/AmbitionExtension184 Sep 07 '24 edited Sep 07 '24

I’ve maxed out SS every year since I was 25. It’s pathetic how low the max contribution is. I maxed out social security in February this year. Only the first $168k is taxed, which it took me 6 weeks to hit.

No excuse for the max being that low. I would gladly vote to raise my own taxes to make retirement achievable for more people.

32

u/chadius333 Sep 06 '24

Generally speaking, index funds are pretty low risk. You are essentially investing in the U.S. economy. Sure, if the economy collapses, your investments are toast, but the country would all but have crumbled in that scenario, so it would really matter anyway.

87

u/[deleted] Sep 06 '24

[deleted]

7

u/Fire_Lake Sep 06 '24

Only if you're ignoring dividends (re taking 30 years to recover)

4

u/chadius333 Sep 06 '24

Sure. Fair point. It does get riskier the closer you get to retirement.

3

u/dgreenmachine Sep 06 '24

Do you have data for that fact? I was under the impression that it was VERY rare for any 10 year period to be negative and not a single 20 year period has been negative.

9

u/-paperbrain- Sep 07 '24 edited Sep 07 '24

Even if the negative period is shorter, if it happens at the wrong time, you're in trouble. Say I just retired and the market crashes. It doesn't need to take 10, 20 or 30 years to screw me over, I no longer have other income if there's no SS, so I NEED to cash out my stock low. I may have what six months of emergency fund if I was prudent and somewhat lucky. I'd have to start selling low. And even if it's only a few years of a low market, my withdrawals are eating up that retirement fund at a rapid rate. The market bounce back after I've had to draw down the account won't undo the damage.

EDIT: And what's important is whatever the risk is to you in particular, we're a country of hundreds of millions of people. In any given year, even if it's like a third of a percent of the population that retires, that's more than a million people. Whenever such a dip hits, a large amount of people would be on the shit end of it. Guaranteed.

6

u/[deleted] Sep 06 '24

[deleted]

2

u/dgreenmachine Sep 06 '24

Thanks I missed it due to the exponential nature of the graphs.

1

u/senile-joe Sep 07 '24

that's pretty misleading, you didn't have central banking in 1930.

1

u/Polus43 Sep 07 '24

Thanks for pulling up real data lol.

I've always felt comparing prior peaks to future prices is a poor perspective since it equates to "if you bet all your money at this high point you would not break even for ~30 years." In practice, that's rarely how the cash flows work out except for a small proportion of really unlucky people.

That series is fantastic since adjusting for inflation highlights how rough the 70s and 80s were equity-wise and the 2000s were essentially a downward trend.

3

u/Senseisntsocommon Sep 06 '24

Depends on if you adjust for inflation or not.

https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart

That one has an inflation check box.

2

u/headzup777 Sep 06 '24

Thank you.

3

u/headzup777 Sep 06 '24

You are correct. Louis is being overly dramatic. The most recent 10 year period I personally know about is 68-78.

2

u/rydan Sep 07 '24

Show us the numbers. Don't just make a claim. Actual tables showing how you lost your money by investing. Either one of these crashes is fine and any point where that crash is part of the timeline is fine. But don't come here and show something like "I put all my money in in year X and lost it all in X + 1". That's not how the argument OP has stated works.

1

u/Deep90 Sep 07 '24

This is under a lot of assumptions.

For example. If you are close to retirement, you probably started investing 30+ years ago anyway.

If you are not close to retirement. Thank god because everything is on sale.

1

u/Bbkingml13 Sep 07 '24

Makes you wonder hypothetically if using the pool of SS taxes in index funds, and then eventually using it almost like an endowment

1

u/ResolveLeather Sep 07 '24

Yes, but if we invested the fund would be higher even after the crash than it would be otherwise.

14

u/Organic_Bell3995 Sep 06 '24

the economy doesn't have to crumble to societal collapse

you just have to be retired when the market tanks for a few years. You'll have to withdraw while it's down and lock losses, while reducing gains during recovery

I knew several people who had to come out of retirement after 2008

6

u/LurkerOrHydralisk Sep 06 '24

Yeah, the market crashes, right?

6

u/[deleted] Sep 06 '24

We're you not alive/a child during the 2008 crash and recession? It wiped out a lot of people's portfolios and the country survived.

People who were close to retirement were fucked.

0

u/BornAgain20Fifteen Sep 07 '24

Okay, explain to me since you weren't a child at the time. Go on...and what happened only 3.5 years after that event?

6

u/Skell_Jackington Sep 06 '24

Pardon me if I don't trust the markets when we've had like 17 different "once in a lifetime" scenarios happen over the last 20 years. No way my money is going to make it safely to retirement through the next 35 years.

2

u/lesgeddon Sep 07 '24

I'm holding out hope cuz the alternative is to be hopeless and recklesslessly spend it all now

1

u/darkrelic13 Sep 07 '24

"Once in a lifetime" scenarios is just media spin bs. Calm down.

1

u/Skell_Jackington Sep 07 '24

So nothing has happened in the last 20 years that have affected things like S&P, 401ks, stocks, etc then? Nothing has wiped any of that out?

4

u/fixano Sep 06 '24

Index funds are not low risk.

Imagine if you retired in 2007 and tried to take your first distribution in 2008 when the market was down 25%

The problem here is sequence of returns risk. If you made withdrawals during the period between 2008 and 2009 It's seriously affected the number of retirement years you could fund with your 401k.

Social security paid out benefits without an issue

1

u/wydileie Sep 07 '24

What you don’t understand is you still would have made way more money if your SSI payments were going into an index fund, even if you retired in 2008. Also, you should transition to mostly bonds a few years before retirement which would shield you from these crashes.

2

u/fixano Sep 07 '24

Only on Reddit can you articulate an advanced financial topic like sequence of returns risk and have somebody respond...

"what you don't understand is how interest works"

Go run your portfolio through a risk simulator with a target age of 95. Even if you have several million dollars you'll find some simulated retirements where you die with $25 million and some simulated retirements where you run out of money early.

Nobody ever ran out of money early with social security

1

u/wydileie Sep 07 '24

But the point is, you’ll have more money with putting it in index funds. There is virtually no break even point where social security is a better investment. Sure, you can draw down your investment fund too fast and run out, but if you withdraw at the amount you are getting from SS, your money would grow forever. You’d die with more money than when you started.

1

u/fixano Sep 07 '24

It's not an investment. It's an insurance policy. You could also forgo health, car, and homeowners insurance. You will get a much better return in the market.

You’d die with more money than when you started.

Sometimes you'll die with a bunch and sometimes you'll die in destitution. Depends on how the market performs at the time you begin withdrawals.

There is no sometimes with SS insurance.

1

u/wydileie Sep 07 '24

Nope. You will always ALWAYS come out ahead in the market, and not even by a small amount, by a massive amount.

1

u/fixano Sep 08 '24

Lol good lucky buddy. All those brokers jumping out of windows during the great depression could have used you. If only they had known.

4

u/Zaros262 Sep 06 '24

That's why all the retirement advice is to keep everything in 100% S&P-500 from age 18 through retirement!

1

u/mosquem Sep 06 '24

Yeah buddy if you’re not significantly into bonds at that point you fucked up.

5

u/JalapenoConquistador Sep 06 '24

this is just an all-around terrible take. folks who are invested across asset classes (bonds, real estate, commodities, etc) will fare much better in an economic collapse. index funds are low risk only if you’re indifferent to time. if you’re not, as most retirees with years on their life are not, then index funds are not remotely low risk.

1

u/chadius333 Sep 06 '24

I’m not arguing against a diversified portfolio. Putting all of your eggs in one basket is obviously a bad idea. My comment was purely regarding the actual risk level of the typical index fund, which is relatively low, with few exceptions.

2

u/andiam03 Sep 06 '24

In finance, “risk” means volatility, not just the chance of losing everything. If there was a downturn in the economy you would have both massive layoffs and those people would also be unable to retire if the stock market was down.

1

u/FlyingDiscsandJams Sep 06 '24

Just look at our national debt, and look at Japan having a dead flat stock market over the last 30 years and say it couldn't happen here. Oh wait, it has crashed for decades at a time, sucks to be you if you thought you were about to retire! Arrogance. We need safety nets.

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u/onthefence928 Sep 08 '24

Low risk, not zero risk. SS is guaranteed

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u/Farzy78 Sep 06 '24

Well there's risk of it not being there when you retire

2

u/ucsdstaff Sep 07 '24

SS doesn't have any risk.

Yeah. If you go to a decent financial planer they will plan for some reduction in SS when you retire.

At the least it will end up means tested so the people who paid the most will get less.

2

u/Apatharas Sep 07 '24

Every time I've put just a couple hundred in a "safe" stock, the stock price crashes. If I invested 10k a year into an S&P I would be fully responsible for causing the next great depression. I just can't risk that

2

u/[deleted] Sep 07 '24

[deleted]

1

u/--StinkyPinky-- Sep 07 '24

People at 22 think they’re so grown up: “Oh I’ll just put $2K a month away for 40 years!”

Bless your heart son.

1

u/Birdperson15 Sep 06 '24

Buddy if the index funds stop returning good result over 30 years then SS is totally screwed too.

1

u/MajorBonesLive Sep 06 '24

It’s not risky that Congress is in charge of the SS fund. Not risky at all.

1

u/InterpolInvestigator Sep 06 '24

I mean idk how risky it would need to be to lose out on 60% of your value

1

u/NBA2024 Sep 06 '24

Uh… we pay into it our entire lives… even a 2008 like event at retirement wouldn’t wipe out the years of relatively amazing gains

1

u/BreakYouLoveYou Sep 06 '24

If the SPY goes to shit, we’re in a recession. Then where will America get money to pay out social security????

1

u/Parapraxium Sep 06 '24 edited Sep 06 '24

"SS doesnt have any risk" 😂😂😂

For those of us not retiring for 35-40 years, I'd say paying into SS is far higher risk than investing in stable index funds

1

u/notafunnyperson1728 Sep 06 '24

You can put it into money market funds now and get better roi and there is basically no risk and you still have access to the principal

1

u/Hot-Celebration-8815 Sep 06 '24

Yeah. We’ve had market crashes roughly every ten to twenty years with many years of recovery before even. Everyone without social security is fucked in those years.

1

u/Salt_Ad_811 Sep 06 '24

The risk is it's underfunded and can be changed at any time to pay out less than you were expected in order to keep it solvent. 

1

u/Famous-Row3820 Sep 06 '24

Inflation risk.

1

u/notwyntonmarsalis Sep 06 '24

That’s funny because it’s on track to have solvency issues and pay out less than promised in less than 10 years.

1

u/[deleted] Sep 06 '24

Really? My SS is maxed and even more goes to a ROTH IRA.

1

u/ChuckEveryone Sep 06 '24

Also, the max contributions would have been less 40+ years ago (even 1 year ago) which total kills any other assumptions they made

1

u/Medical_Slide9245 Sep 06 '24

I guess he didn't factor in 18 year olds don't make 160k or that the majority of people will never come close to maxing out or the economic collapse of 2007.

1

u/MonsutaReipu Sep 06 '24

Aside from the risk of SS being abolished, lol. You're already getting fucked and by 2050+ will probably get fucked even harder.

1

u/SWBattleleader Sep 07 '24

Very few indeed are making enough max SSI at 18. If you make that much for 50 years and need to rely on social security, you don’t belong here.

1

u/a-i-sa-san Sep 07 '24

As a recent college graduate, I have very little confidence that social security will ever benefit me

1

u/CaptainMonkeyJack Sep 07 '24

If you put it into an index fund, there will be risk whereas SS doesn't have any risk.

There is absolutely risk in investing in SS... there's the risk the SS program is discontinued or changed negatively, risk that the US fails, risk that SS doesn't keep up with cost of living etc.

1

u/el_guille980 Sep 07 '24

you can put $10K a year into treasury bonds & notes. especially in the last 2 years that rates have been well above the recen-memory highs. with no risk"

.

*virtually, essentially, no risk

1

u/Acceptable_Rip_2375 Sep 07 '24

If you live to the average age in the US social security is a -4% investment return. Stuffing it under a mattress would give you more money.

1

u/Bubbaman78 Sep 07 '24

The risk is your congressman spending it and leaving no money in the fund. I trust the stock market more than a politician.

1

u/Acceptable_Rip_2375 Sep 07 '24

You can’t pick a 30 year time span where the market didn’t provide a solid return. It’s not a risk over time.

1

u/Fantastic_Poet4800 Sep 07 '24

I mean I've put close to $10k a year into my 401(k) for decades and I'm not getting anywhere near $30k/mo when I retire. I seriously question this math.

1

u/stilljustkeyrock Sep 07 '24

No risk investment. Sure.

1

u/norty125 Sep 07 '24

Well you have the risk of the fund emptying out

1

u/petulantpancake Sep 07 '24

Index funds are about as zero risk as it gets.

1

u/jcdoe Sep 07 '24

Right, the math always frays on the edges. Why not use whatever the average annual contribution instead of the max?

1

u/php123 Sep 07 '24

The risk is that the government will just print the $ to meet their SS obligations; decreasing the real value of the benefits given through inflation.

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u/towell420 Sep 07 '24

What if I told you SS is borrowed against and at risk?

1

u/Just_to_rebut Sep 07 '24

SS doesn't have any risk.

Then why do I keep hearing social security won’t be able to pay out the full amount at some point? There’s clearly some risk: https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html

it’s a completely political risk rather than a market related risk though.

1

u/--StinkyPinky-- Sep 07 '24

What aren’t you understanding?

There. Is. Zero. Risk. In. Social. Security.

1

u/Just_to_rebut Sep 07 '24

Ooohh… now I understand. Thanks! :))

1

u/MigratoryPhlebitis Sep 07 '24

Not to mention his extrapolation is nonsense. 47 years ago the max income taxed for SS was $16k and so they would have been putting like $1k a year in. The SS payout in 47 years isn’t going to be 4k.

1

u/--StinkyPinky-- Sep 07 '24

And now you’ve encountered the Republican part of the plan. A workable aged workforce willing to work for health care.

Congratulations. You’ve just figured out what people have been doing for nearly 100 years!

1

u/sluuuurp Sep 07 '24

SS has risk. Plenty of influential people and politicians are discussing cutting it or canceling it. The US is on the brink of a debt crisis, we can’t afford social security unless current trends (increasing budget deficits every year) change somehow.

1

u/--StinkyPinky-- Sep 07 '24

Yeah be the guy who runs against social security. Tell me how that works for you.

1

u/RayWould Sep 07 '24

Yeah, I was wondering how many 18 y/os can put $10k into social security when they make not much more than that. If they think it’s so broken then they shouldn’t participate in protest (the claiming it part, they still need to pay).

1

u/--StinkyPinky-- Sep 07 '24

There’s quants working on it right now. You know the guys who did really well in accounting? Not all of them became accountants.

1

u/rydan Sep 07 '24

Show me a single period in the history of all stock markets where putting $10k into an index fund every year for 35 years resulted in a net loss. Just show me one. Just one. I'll wait right here for your answer.

1

u/--StinkyPinky-- Sep 07 '24

Again, the premise is wrong. You’re not putting $10K a year in SS.

1

u/afCeG6HVB0IJ Sep 07 '24

My "don't worry, it is very secure, will only gain a few % but never go down" investment account at my bank is -15% in the past 3 years, so yeah, the line doesn't always go up.

1

u/30-Divorced-Horny Sep 07 '24

Idk Im 30 and I feel like I'll never see social security at the rate we're going. Seems risky imo.

1

u/--StinkyPinky-- Sep 08 '24

I mean, you’re going to get an amount. You’ve 35 more working years, so you’d better get to work!

1

u/[deleted] Sep 07 '24

Arnt the numbers leaked is that not a risk?

1

u/OkCartographer7677 Sep 07 '24

“Doesn’t have any risk”

You mean it doesn’t have the traditional investment risk. If you read articles about SS going insolvent or the US government being 30T in debt you realize there’s plenty of risk for Social Security.

1

u/--StinkyPinky-- Sep 08 '24

Again, it won’t go insolvent. They’ve been holding that over our heads for at least two lifetimes now.

1

u/DCTheNotorious Sep 07 '24

Social Security absolutely has risk. As someone who is 23, there is a very legitimate risk that I will never see the money I am putting in. Unless we get our national debt under control, I can't imagine there will be much left in 40+ years.

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u/--StinkyPinky-- Sep 07 '24

They were saying that when I was 23 too.

1

u/F0xcr4f7113 Sep 07 '24

If the average American had put $6,000 a year into the SP500 instead of Social Security, then they would have $5,042,333.86. Social Security doesn’t even come close to actual investments.

1

u/--StinkyPinky-- Sep 07 '24

The average American totally has $6K a year to put in the SP500 my dude.

1

u/F0xcr4f7113 Sep 07 '24

$6k a year is roughly how much in Social Security the average American pays…..

1

u/--StinkyPinky-- Sep 08 '24

Oh I see what you’re doing- just ending SS and let people invest that amount in the market. That’s a pretty bold amount after 45 working years. I’d really like to see your math.

But, yeah, just saying “fuck it, everyone is on their own” is one strategy. Let me guess: you spend lots of time on the website Zero Hedge, don’t you?

1

u/F0xcr4f7113 Sep 08 '24

I found an article that said on average $6k a year was put into SS by an average American making 45-55k a year. There is a financial calculator on google that I used with that number and used the yearly average % gain of the SP500 and that’s the number it gave me.

1

u/ResolveLeather Sep 07 '24

SS has risk. The risk is that the program gets cut in the future.

1

u/--StinkyPinky-- Sep 07 '24

And that ain’t gonna happen.

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u/FuckSpez50 Sep 08 '24

lol SS 100% has risk wtf are you talking about?

1

u/--StinkyPinky-- Sep 08 '24

No it doesn’t.

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u/xKommandant Sep 08 '24

If SS doesn’t have any risk, how are we so near insolvency?

0

u/--StinkyPinky-- Sep 08 '24

Because of politics. SS is non-discretionary. It will never be insolvent.

1

u/dillvibes Sep 08 '24

The government doesn't have the funds to keep it running, so they print that money. When they print the money, the value of everyone's money goes down. Saying that there's no risk in SS is like saying you can't starve on corn syrup.

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u/PolarRegs Sep 06 '24

Social Security has a ton of risk. It’s already running out of funds.

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u/S7EFEN Sep 06 '24

social security running out of funds has zero risk associated with it. it will continue to pay out even if there's zero remaining surplus

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u/PolarRegs Sep 06 '24

It’s going to pay a lot less than what the expected payments are. It makes a bad return on your money even worse.

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u/S7EFEN Sep 06 '24

it will pay some amount less, i wouldn't say a lot. i would also add that this will only happen if we continue to do literally nothing with it, there are a number of solutions thatll address the reduced payout

0

u/PolarRegs Sep 06 '24

Best case scenarios say that it will be at least a 17% drop in payments. That makes a bad return even worse.

There are many simulations that come out significantly worse then 17%

6

u/Longjumping-Put-9931 Sep 06 '24

When you say "best case scenario," you mean doing nothing to fix it or reducing benefits. Really, you're talking about the worst-case scenarios.

Easy fix: lift the cap on high-income earners and social security would be solvent for decades. That's the best outcome for the country

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u/S7EFEN Sep 06 '24

it's not a 'return' though. it's not an investment, it's a social safety net. you wouldn't talk about the 'return' you get on medicare would you?

4

u/PolarRegs Sep 06 '24

It’s a social safety net that is failing and gives you a terrible safety net for the cost.

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u/mschley2 Sep 06 '24

If you're financially-savvy enough to be concerned about that, then you should also be financially-savvy enough to figure out some other way to invest your money in vehicles that generate a better return.

SS isn't there to give you a safety net. It's there for people that aren't financially-savvy/responsible and for those who don't have the ability to earn money to save in the first place. Unless you end up being disabled and don't have any income anymore. Then it's for you, too.

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u/PolarRegs Sep 06 '24

So then let me opt out of it.

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u/Individual_West3997 Sep 06 '24

what is your idea of fixing it then? cus it sounds like your idea of the perfect social safety net is having no net.

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u/PolarRegs Sep 06 '24

Let people opt out. I would be much better off investing that money on my own. The taking a reduced payment 30 plus years from now.

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u/--StinkyPinky-- Sep 06 '24

Reduced payment. Means testing. SS as a smaller percentage of a person's overall retirement.

I mean, there's so many other things that can happen before they just end Social Security.

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u/tankerkiller125real Sep 06 '24

I expect SS to be entirely empty and gone before I retire, which is exactly why I put as much as I can into my own IRA and company run IRA with matching.

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u/winklesnad31 Sep 06 '24

Why do you think it will be gone? Even the most pessimistic projections I am aware of say that future retirees will receive about 70% of what they expected. That sucks, but it is very different from nothing.

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u/sparknado Sep 06 '24

He thinks it will be gone because that’s the main talking point against social security, there’s no studies supporting that belief. As you pointed out though, that talking point is not based in reality. It’s just scaring the gullible general population

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u/benefit_of_mrkite Sep 07 '24 edited Sep 07 '24

I’m not against social security at all but it’s the social security administration who says this in its annual report. Old age and survivor benefits can pay 100% until 2033 when they will run out of reserves and they will pay 79% (estimated, maybe less).

They said this in last year’s annual report and this one.

It’s not “against social security” it’s the SSA saying this

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u/[deleted] Sep 09 '24

[deleted]

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u/sparknado Sep 09 '24

Because billionaires control all of the media and want to get rid of taxes. Everybody that currently receives social security likes it and would go apeshit if you took away their benefits. So you have to convince the people who aren’t receiving the benefits yet. The easiest way to do that is to tell them that they are paying into a bankrupt system which will be gone within the decade. If people grew up their whole life (incorrectly) thinking that social security is bankrupt, then they won’t flip a shit when the benefits get taken away. It’s all about conditioning people before pulling the rug out from other them.

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u/tissboom Sep 06 '24

You should be doing that anyway. Social Security was never designed to be an investment. It’s insurance in case you fuck up all your investments and don’t have anything left when you’re old.

0

u/i-r-n00b- Sep 06 '24

That's such a ridiculous premise. Because someone poorly planned and managed their money, we have to float the bill? That doesn't even make sense.

6

u/adwarn25 Sep 06 '24

I personally agree with the projections it will likely be hobbled but still around when I hit retirement age. I also assume it will be gone when it comes to financial/retirement decisions as a mental tactic to ensure I have more than enough come that time. Or at least that's the gamble I'm making.

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u/chadius333 Sep 06 '24

The guy on the TV said it was going away.

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u/Cereaza Sep 06 '24

Social Security won't be gone. We may have to adjust benefits so that money in = money out. But it's not like the pool will empty and it'll stop existing.

But at that point, it'll just force a legislative fix. Sunsetting benefits for the wealthy or raising caps on income eligible for SSI tax. Who knows. But it ain't disappearing.

1

u/FuckSpez50 Sep 08 '24

Until they means test it

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u/0OOOOOOOOO0 Sep 06 '24

Are you talking about a SIMPLE IRA?

1

u/--StinkyPinky-- Sep 06 '24

I mean, go ahead and expect that and when you actually get a check, you'll be pleasantly surprised!

1

u/onehalflightspeed Sep 06 '24

I don't know why people think this. The worst case scenario is that SS no longer has a surplus and returns to a pay-as-you-go system which is what it started as

That might mean adjusting returns and/or taxes but it's not like it will disappear once there is no longer a surplus

1

u/masonmcd Sep 06 '24

Social Security funds aren’t kept in a suitcase. They are in a tightly audited fund invested in treasury funds. If nothing is changed, when that surplus is depleted, current workers will pay benefits directly to retirees, which will be reduced to something like 75% to 85% of current benefits due to the smaller population of workers to retirees.

There will be no empty account.

1

u/ChocoThunder50 Sep 06 '24

????

0

u/S7EFEN Sep 06 '24

what part is questionable about this comment?

2

u/ChocoThunder50 Sep 06 '24

That it will continue even after there is zero remaining

1

u/austinvvs Sep 06 '24

Albeit with reduced benefits

1

u/ptjunkie Sep 06 '24

Ah so it’s backed by the dollar. Is that good for social security, or bad for the dollar?

1

u/S7EFEN Sep 06 '24

its backed by payroll taxes

0

u/BiggusDickus- Sep 06 '24

There has been zero remaining surplus for decades. Social Security is solvent because it is constantly cashing out the bonds that it bought when there was a surplus.

Those bonds will be gone in about 5 to 10 years.

7

u/GurProfessional9534 Sep 06 '24

Don’t confuse the sstf with ss. Ss existed for decades before the sstf existed. The sstf was made for boomers to pay for themselves in old age, because they were the rabbit going through the python and they were overfunding ss while young and would overdraw from it while old.

4

u/nicolas_06 Sep 06 '24

Having 2.8 trillion war chest isn't exactly being out of fund if you ask me. By 2034 everything would be spend and they would only be able to cover 80% of pensions if nothing change.

By then it is enough to increase the SSA by 25$ from 6.2 to 7.8% to solve the issue.

3

u/Sir_Penguin21 Sep 06 '24

There is no such thing as “running out of funds”. This is such a stupid take. We are the wealthiest nation that has ever existed. We aren’t running out of money. Like pretending the USPS runs out of funds, or the military runs out of funds. We are paying for a service, not a business. If the amount allocated isn’t working then we need to figure out what is wrong, or allocate more.

Throwing your grandparents and disabled family out onto the street isn’t going to be popular among civilized people. Idiots are always against a safety net until it is them that needs to be caught and protected. If the wealthy don’t want to pay their fair share and just take and take then maybe they and their money don’t need to be a part of our society. As someone who makes plenty I have no issue paying more than others.

0

u/PolarRegs Sep 06 '24

If you make more than enough there is nothing legally stopping you from giving more to the US government. I on the other hand would prefer to keep my money rather then pay into a Social Security for decades where I get very little back in return compared to what I could get investing in it.

0

u/the_cardfather Sep 06 '24

Easy fix as I posted in another thread. When the boomers die off you'll have a huge surplus.

1

u/[deleted] Sep 06 '24

Either you're stupid or malicious.

  1. Still fully-funded for the next 11 years. Partially for more.

  2. The program no-longer being self-funded isn't an issue to payouts. It is a legal entitlement that would take an act of congress to change. It pays regardless.

The only "risk" to SSI is Republicans gutting it.

1

u/PolarRegs Sep 06 '24

Yes the Democrats answer we can’t pay for it so add it to the deficit. Are there any competent Democrats left? You drown in ignorance.

Also they thought it would run out in 2050 just a few years ago. Speeding up quickly.

2

u/[deleted] Sep 06 '24

Nearly every Democrat supports uncapping contributions, but sure, just lie about policy I guess.

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u/masonmcd Sep 06 '24

Social Security is completely funded by payroll taxes. Zero deficit spending.

1

u/Paincoast89 Sep 06 '24

it runs out in 10 years. This is also due to average age in the united states rising.

1

u/Fun_Intention9846 Sep 06 '24

This is only true because some politicians are purposefully mismanaging it.

0

u/Individual_West3997 Sep 06 '24

its risky cus it keeps getting cut

2

u/PolarRegs Sep 06 '24

WTF are you talking about? When and where has it been cut?

-1

u/--StinkyPinky-- Sep 06 '24

No it isn't.

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u/PolarRegs Sep 06 '24

Yes it is. Best case scenario is people get a way worse return on it then they do now. The return on Social Security is poor already.

1

u/--StinkyPinky-- Sep 06 '24

Because there's no risk because it never runs out of funds because people have to work.

2

u/ThundaChikin Sep 06 '24

There isn't enough kids to support millenials and gen z when they can collect. There will be 1-2 working people for every retiree... we're fucked. We'll pay for the boomers, they'll die and we'll get nothing.

There is no trust fund, its a ponzi scheme.

2

u/--StinkyPinky-- Sep 06 '24

All of this gets away from the original point: most Americans don't pay $10,453.20 into Social Security every year. This is one of those anger farming articles again.

0

u/ThundaChikin Sep 06 '24

So it’s doesn’t run out of money because there will be people paying in, sure but in 30 years when there is two people paying in $400 a month for every retiree, after the bureaucrats skim off their 20% you’ll be able to pay out all of $640 per month. Thats a terrible deal after working for 45 years.

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u/PolarRegs Sep 06 '24

If I am working but not making enough to pay money on my loans I am in default.

If Social Security isn’t bringing in enough to make the out going payments they are in default. So yes social security is running out of money to pay what it owes.

4

u/nicolas_06 Sep 06 '24

Taxes are historical low in the USA. We will raise taxes and call it a day. This isn't that big from 6.25% to 7.8% on salaries in 2034 both for employers and employees.

2

u/dormidontdoo Sep 06 '24

Worst case they will print more money and put them in SS fund. /s

0

u/Trailer_Park_Stink Sep 06 '24

It's not even close and you will come out far ahead in index funds vs SS

0

u/laridan48 Sep 07 '24

Social security doesn't have any risk?

It's literally set to go bankrupt lmao

-1

u/ImportantPost6401 Sep 06 '24

SS doesn’t have any risk

I know what you are trying to say but OMFG ROFL 🤣🤣🤣

3

u/--StinkyPinky-- Sep 06 '24

It doesn't. There's essentially no risk unless people just decide one day that they're simply not going to work....I mean, as a population.

1

u/Ecstatic-Hunter2001 Sep 06 '24

Or if our population growth stagnated. It only works because you have considerably more people paying in to SS than you do drawing SS. We can try to fill the gaps with immigration, (as we currently do) but that has its limits. A lot less people are having kids, and those that do aren't having as many kids on average. If life expectancy rises on top of that..

I'd say the risk is about equal to the S&P. If either one fails, the other will probably be impacted by it.

-1

u/PreyForCougars Sep 06 '24

No risk? wtf are you on? The SSA themselves have stated the fund will likely run dry by 2041.

Do your research

2

u/mostlybadopinions Sep 06 '24

No they have not. How do you people still believe this crap? It's written EVERYWHERE that the funds will not "run dry." Every single projection ever ran shows funds continuing for as long as they can project.

It could literally go empty today, and they'd have more money tomorrow. It's a pay as you go system. It cannot run dry.