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Old 11-16-2012, 02:38 PM   #9
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Default Re: Invest in 401K or pass it up and keep entire pay?

Originally Posted by joe
Social Security is the textbook definition of a Ponzi Scheme, except it's actually worse than a Ponzi Scheme, because at least people pay into those voluntarily.

Social Security is designed to provide social equity to retirees while keeping individual benefits in mind. What exactly makes you think SS is worse than a Ponzi scheme? You believe that people put money in a system where they will not get any money or benefit out of it?

Because that is incorrect, throughout the entire lifetime of social security, the system has been reformed multiple times to ensure those who contribute money in are eligible for benefit collection. Since its inception in the 1930s, it's had no trouble paying any retirees despite economical turmoil and increasing life expectancies.

Originally Posted by joe

Within 15-20 years, Social Security checks will either:

-Not be given at all
-Not pay as much as they do today
-Be the same amount of money, but due to inflation they'll actually be much smaller.

There is almost no possibility that social security checks will be cancelled with present day contributors seeing 0 cents on the dollar. Even post-bankruptcies of the most corrupt organizations liquidate to provide partial relief on losses. It is comical to think the US government would be able to get away with providing no benefit to 99% of the US population.

IF absolutely no reform actions are taken, then in 2017 the social security trust fund is expected to decrease. In 2027, the trust fund will evaporate, and in 2040 total program outgo will be greater than cash inflow.

What most people don't know is that long-term financial balance (70 years) of the plan can be achieved by increasing social security tax from 12.40% to 14.42%. In case you didn't know, you pay 6.2% of your income to SS, and your employer pays the other half. If you are self-employed you pay the whole 12.40%.

What a terrible thought! They want to increase our tax by 2.02% !?!? That's just not American! Nevermind the fact that we are the ones who threw the plan out of balance by living longer or the fact that fluctuations in our population (baby boomers) are causing financial volatility within the plan. We were okay when you increased social security tax from 2% to 6% from the 1930s to 1960s, and we were fine with an increase from 6% - 10% from the 60s to 1980. And then when you increased it again to 12.4% in 1990 we didn't have a problem. But we're putting our foot down this time!

Originally Posted by joe
Like all Ponzi Schemes, eventually SS will fall apart.

Yes, SS, like most civilizations and planet earth will fall apart one day. As for now, if SS is a Ponzi Scheme then so is paying taxes, buying insurance, and any other form of pooling money together for the cause of social welfare.

Originally Posted by joe
There is no money in the social security "trust fund," the government spent it all.

That is false. But if you would like to humor me, I'd invite you to find a credible source proving the trust fund is out of money.

Originally Posted by joe
You need to plan for your retirement separately from SS, don't rely on it.

Probably the only concrete statement you've made that I agree with. But then again, I'd also recommend people have emergency funds and not just rely on unemployment checks. Overall fiscal conservatism doesn't apply specifically to retirement.

Originally Posted by joe
And by the way, I'm not anything close to a financial adviser, so you best do your own research and don't strictly rely on what I say, or what any random person online says!


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