It's nothing of the kind! That is an unsubstantiated myth. The system is sound, so far, from the actuarial standpoint but needs urgent tweeking to adjust for changing demographics. Congress is remiss in not doing this forthwith. However, there is a very serious problem affecting social security in the US that has nothing to do with actuarial soundness, and that is the credit worthiness of the U.S. The money owed by the government to the Social Security Trust must be borrowed by the Government to pay back the Trust. Starting about now the S.S. system will no longer produce much if any of a surplus that can be borrowed by the government at artificially low rates, and within a few years the system will need to start calling its "loans" made to the giovernment. That is going to accelerate the pressure on Treasury and the Fed to monetize more and more of the debt, and that should in turn lead to higher inflation. But since the official government inflation figure underestimates real inflation in the cost of living, social security retirees will get cheated. The best way to fix this system in my view is to allow a wider range of investment of social security assets including foreign investment along with a modest increase in premiums graduated toward the upper end of the income spectrum and a raising of the cap disproportionately to the increase in benefits at the high end. There are compelling reasons why an entirely privitized retirement system for the vast majority of American workers is a terrible idea. The main one is that low income workers can not afford to lose the benefit of shared risk that defined benefit retirement plans such as Social Security offer. What this means in practice is that one has to make smaller monthly contributions to reap a set benefit than one would if risk was not shared and those who died young did not subsidize those who live longer. No one knows how long they will live!
Now let's try to compare apples to apples for those that are angry with the teacher getting a pension. About 20 years ago I decided to try to get my financial house in order. One of the things I was looking for was a pension. I took a job with the State of Florida because they had a pension. I also took a cut in pay but the pension component was important to me. Remember, I didn't force them to give me a pension, it was part of the package which included less pay than could be earned in the private sector. In addition, I can have a defined plan pension or an optional plan where retirment monies are placed in an account for "investment". Please note that the amount that is put into the optional plan is greater than the amount that is placed in the defined pension plan. Despite that, I chose the defined plan because I didn't want to have to worry about investments and I was willing to accept "less" in favor of stability. If the pension plan is administered well, then there should be no problem with future payments because the plan is funded as you go. The problem is if pension funds are diverted to pay for other things, then you set-up a situation where you need today's investor dollars to pay for previous "investors" (Ponzi). Don't blame State workers for poor financial management of a State's pension fund and don't blame State employees if the benefits at your place of work does not include a pension plan. In fact, I would suggest to you that there are many that have looked down on and would not accept a State job due to lower salaries but did not factor in the value of the benefits. Joe.
So why should I fund your pension if I am not getting one? Why should I fund your pension because someone else promised you something they couldn't deliver? Pensions that promise a near full salary and free healthcare until the day you die are inherently flawed. If such investments existed with such rates of return, everyone in the private sector would be investing in them. They're not investing in them, you know why? They don't exist.
This topic really has me pissed off. Recently, I was invited by a friend to join a group on facebook that was comprised of people that went to my elementary school. Apparently the same gym teacher I had was there for quite some time after I graduated. I learned this by visiting the page and seeing younger people refer to him as "Dr. ***" I left out his name for privacy reasons... not that anyone would know him here. But anyway, I later learned that he got a doctorate and had all the students address him as "Dr." He was no doctor when I was there. What Bullshit. This guy teaches phys ed for grades K-5 and gets a doctorate degree in some bullshit field. You know why? Because the more degrees you have, the higher your salary gets, and ultimately, your pension payout. This guy got a bullshit doctorate in god knows what so he could retire with a ridiculous pension. All for gathering jump rope and kickballs for 7 year old kids.
Anyone buy you and I recongize that public sector employees have pensions and health care... paid for by money from the private sector... while many private sector employees have either no such benefits or poor ones.. ?? Early in my working career, I thought of government employees as rummies... those who couldn't hack it in the "real world"... well, the joke's on me..
You are not funding my pension. I am funding it by getting a reduced salary. Each pay period a certain % of my salary is paid to the pension fund as a benefit. Please note that if I had chosen the optional plan I would have received a larger % of my salary deposited to a retirement account. The defined pension plan actually requires less to be fully funded. Also note that even if the amount that is placed in the pension fund was added to my salary, I would still be earning less than the private sector. I accepted earning "less" to have a more stable financial future. Those that were making the bigger bucks have apparentely spent them all or didn't save near enough to fund their lifestyle. They made their choice and I made mine 20 years ago which includes 20 years of payments into a pension fund instead of getting those funds in my salary. The amount of money paid into the pension fund on my behalf will more than easliy pay me the future benefits that I earned. Of course, if the literature is correct, Florida has one of the best funded pension plans. Joe.
Here is an excerpt from my initial post in this thread: One state retiree, 49 years old, paid, over the course of his entire career, a total of $124,000 towards his retirement pension and health benefits. What will we pay him? $3.3 million in pension payments over his life and nearly $500,000 for health care benefits -- a total of $3.8m on a $120,000 investment. Is that fair? A retired teacher paid $62,000 towards her pension and nothing, yes nothing, for full family medical, dental and vision coverage over her entire career. What will we pay her? $1.4 million in pension benefits and another $215,000 in health care benefit premiums over her lifetime. Is it âfairâ for all of us and our children to have to pay for this excess? Our new governor in NJ stated this. Now, I don't know how Florida's Pension works. But in the above example, 124K becomes a payout (including healthcare) of $3.8 million. Check at what you contributed, and see what your payout will ultimately be. Does it make sense? If not, you may be in for a rude awakening. Now who in the private sector gets those kind of results? My 401K sure as hell doesn't. But luckily, I invest my own as well and get better returns from loads of research.... most people don't have the time or knowledge to get that kind of research. So... if Florida's pension #s don't add up in the end, should other people pay the shortfall? Because that's what is going on in many states and municipalities. And you cannot compare the stress level and job (in)security between the private and public sectors. I always worked in performanced based jobs if I wasn't self employed. My salary relied on it. A typical government worker would have a heart attack on day one if they walked in my shoes.
Thats hilarious. A doctors salary for gathering jump rope and kickballs for 7 year olds! LOL Whats going to be sad though is that when this whole ponzi collapses, this gym teacher that thought he was going to be sitting on some beach drinking mai tais and looking at young half naked girls all day, will find that he is sitting in a studio apartment in the bad area of detroit eatting rice & beans and watching whatever fuzzy TV channel he gets with his rabbit ears antenna.
Is there a non-partisan analysis available showing which states might already be there, and which ones are next? (I'm not doubting your statement at all, would just like some background material)
My understanding of the Dutch system is that the *only* guaranteed part (their equivalent of Social Security) represents something like 60% of minimum wage. In US terms that would be something like $650/month. I'm 20 years from getting SS - if I never work another day in my life I've already qualified for a "guaranteed" ~$3k/month SS payment. That's insane.