" American Savings Rate IS NOT ZERO " you're right, saving rate is not zero, it's a negative saving rate now, look at US deficit ....
Can't have a negative Savings Rate. You are either saving or your not. From the Social Security Administration Website ============== http://www.ssa.gov/pubs/10055.html Changing demographics are driving need for changes in Social Security The main reason for Social Securityâs long-range financing problem is demographics. We are living longer and healthier lives than ever before. When the Social Security program was created in 1935, a 65-year-old American had an average life expectancy of about 121/2 more years; today, it is 18 years and rising. In addition, more than 80 million âbaby boomersâ started retiring this year, and in about 30 years, there will be twice as many older Americans as there are today. At the same time, the number of workers _paying into Social Security per beneficiary will drop from 3.3 today to about 2.1 in 2034. These demographic changes will severely strain Social Security financing Current Social Security system is unsustainable in the long run Many people think that the Social Security taxes they pay are held in interest-bearing accounts earmarked for their own future retirement needs. The fact is that Social Security is a pay-as-you-go retirement systemâthe Social Security taxes paid by todayâs workers and their employers are used to pay the benefits for todayâs retirees and other beneficiaries. Social Security is now taking in more money than it pays out in benefits, and the remaining money goes to the programâs trust funds. There are now large âreservesâ in the trust funds, but even this money is small compared to future scheduled benefit payments. In 2017 benefits owed will be more than taxes collect_ed, and Social Security will need to begin tapping the trust funds to pay benefits. The trust funds will be exhausted in 2041. At that time, Social Security will not be able to meet all of its benefit obligations if no changes are made. ================ there your guaranteed savings. Straight from the man.
There's a smart man! Yes, the American savings rate went negative in 2004, and is increasing into red territory every year. This is according to McConnell and Brue, I did not "ET" these numbers out of my ass. Negative savings is possible with credit. When you spend on credit, have large debt, and save hardly anything, this is negative savings.
The unfunded liabilities coming in the next few decades will take a little more than "minor tweaking." For one thing, they need to aggressively increase the age limit. When it was started, life expectancy wasn't much more than 65. Now people depend on SS for 15 or 20 years or more after retiring. It needs a major revamping, and yes, privatization should be an alternative.
I respectfully disagree. The retirement age and/or benefits will have to be changed if nothing is done. However minor raising of the income limit for contributions and a modest increase in the monthly contribution rate will make the system sound far into the future without having to increase the retirement age or reduced benefits, so long as those changes are made very soon. Any delays will be very detrimental. Perhaps the social security detractors recognize this and are actively working to prevent an immediate fix. A Democratic controlled House and Senate under an Obama presidency would likely assure a very rapid fix of social security. Another possibility would be to raise the interest rate earned by the trust fund. I think the rate is currently set at 3%. That would have the effect of spreading the cost out relative to the graduated income tax, as the money borrowed from the Trust Fund replaces money that would otherwise have to be borrowed from other sources and paid back via taxation and inflation.
Social Security is a Ponzi scheme .You have no retirement account.When you retire you will be paid by other workers. It will always require more workers paying in than retired persons. A successful Ponzi scheme requires an ever increasing number of people paying in than the number being paid. It is NOT sustainable except in an increasing population of payers. All this talk about fixing it is "political speak" to the people getting ripped off.
This, again, is a common misconception and is incorrect. The system is based on actuarial calculations and can be kept sound in perpetuity with adjustments from time to time to allow for changes in the ratio of contributors to beneficiaries and for changes is longevity. Financial soundness does Not require "an ever increasing number of people paying in than the number being paid."
I looked everywhere but I can't find the link. It was posted previously on ET but it was an article written by the FED board member from St. Louis. He basically said that debts owed to past generations was more than future generations could fund. And of the three options of getting out of it the most likely was hyperinflation. He was basically laughing at the idea of "minor tweaking". I'll keep looking for the article and post it if I find it. If anyone else finds it feel free to put it up.