6 Replies Latest reply on Jan 24, 2015 11:42 AM by smaneck

    the other 58 percent

    BoBraxton

      I know using a percent in a phrase can get one into trouble.

      However, since the recent election is (mostly) behind us, perhaps I can risk it.

      I follow closely (and religiously) the Letters to the Editor. A few days ago a letter writer proposed a "solution" for permanently funding Social Security and pointed out that only 42% of the Income (gross) in the nation comes from wages and salaries.

      This would mean that 58% of the nation's individual income(s) are from sources such as Interest, Dividends and "Other" and not from pay for work itself.

      Today I decided to check that out for myself.

      From "our" retirement voluntary investments in the past twelve months the increase in total value is greater than all the Social Security we have been paid the first three full years of our retirement (beginning 2011 October).

      Of course your mileage may vary (as may ours).

        • Re: the other 58 percent
          JerryD

          Not many living off of interest since the Fed drove rates down so low that one can't even beat inflation and end up spending principal. IMHO this looks like taking the recession recovery out of the hides of many retirees who don't understand investing any further than SS, CD's and maybe a few government bonds.

            • Re: the other 58 percent
              BoBraxton

              This letter was published in the Washington Post. The writer of the letter actually proposed that those who already retired be exempt. In addition, the proposal had two parts (1) to raise (or eliminate) the cap on (wages and salaries) earned income subject to the Social Security (FICA); and the second part was to create a 1% levy on Income received (for those who have NOT yet retired) from other source, not wages and salaries. In my case (and of spouse) there is no actual income since we did not sell (everything) and therefore the increase (value) is only a "paper" increase, not actual.

                • Re: the other 58 percent
                  smaneck

                  Removing the cap, by itself, would fix social security for an additional thirty years. I'm not persuaded we would need to do anymore.

                    • Re: the other 58 percent
                      JerryD

                      A few years ago, I was made aware of an excellent and easily understood paper on the issues with SS and solutions that includes how much of the shortfall each solution fixes. I include it for your enjoyment: http://crr.bc.edu/wp-content/uploads/joomla/download/social_security_fix-it_e-book_-_sm.pdf

                       

                      One of the SS solutions is to raise the income cap for SS. I don't believe that it has to be totally removed, just go back to the original percentage of income SS is based on back in the 1980's and do some other minor tweaks. SS is a perfect example of our politicians putting out solutions that lack permanence, and I sometimes suspect that they think that they are pulling one over on us. When they fail to place inflation adjustments on things like taxable income for SS, tax deductions, estate tax exemptions, etc. they are subtly insuring that inflation will greatly diminish these benefits in just a few years and the Government or favored subsets will again be extracting more than promised.

                        • Re: the other 58 percent
                          smaneck

                          Nice pamphlet. There is another solution which no one is talking about,-increasing immigration.

                          One of the reasons a crisis is predicted is because the baby boom generation is so big and as we retire the labor participation rate is going down. That means more people are taking money out of the system than are putting into it. But guess what? The Millennium Generation is even bigger and getting bigger still due to immigration. And some of us are dying. Obviously we don't want to increase immigration while unemployment is relatively high but that will be the easiest way to increase the labor participation rate when needed. 

                  • Re: the other 58 percent
                    BoBraxton

                    Paper value is increasing (at least through yesterday's market close). However, the further we go into our retirement (years) the more we are spending relative to "fixed" income (Social Security and Pension direct deposits).