Summer Love help.

[OGShocker]

Is this stuff true?
I am asking you because, I trust you to give me a real response. Unlike CMD. :D
Since many of us have paid into FICA for years and are now receiving a Social Security check every month -- and then finding that we are getting taxed on 85% of the money we paid to the federal government to "put away," you may
be interested in the following:
Q: Which party took Social Security from an independent fund and put it in the general fund so that Congress could spend it?
A: It was Lyndon Johnson and the Democratic-controlled House and Senate.
Q: Which party put a tax on Social Security?
A: The Democratic party.
Q: Which party increased the tax on Social Security?
A: The Democratic Party with Al Gore casting the deciding vote.
Q: Which party decided to give money to immigrants?
A: That's right, immigrants moved into this country and at 65 got SSI
Social Security. The Democratic Party gave that to them although they never paid
a dime into it.
Then, after doing all this, the Democrats turn around and tell you the
Republicans want to take your Social Security. And the worst part about it is, people believe it!
2004 Election Issue
This must be an issue in "04". Please! Keep it going.
SOCIAL SECURITY: (This is worth the read. It's short and to the point.) Perhaps we are
asking the wrong questions during election years.
Our Senators and Congressmen & women do not pay into Social Security and, of course, they do not collect
from it.
You see, Social Security benefits were not suitable for persons of their
rare elevation in society. They felt they should have a special plan for
themselves. So, many years ago they voted in their own benefit plan.
In more recent years, no congressperson has felt the need to change it.
After all, it is a great plan.
For all practical purposes their plan works like this:
When they retire, they continue to draw the same pay until they die,
except it may increase from time to time for cost of living adjustments. For example, former Senator Byrd and Congressman White and their wives may expect to draw $7,800,000.00 (that's Seven Million, Eight-Hundred Thousand
Dollars), with their wives drawing $275,000.00 during the last years of their lives.
This is calculated on an average life span for each. Their cost for this
excellent plan is $00.00. Nada. Zilch.
This little perk they voted for themselves is free to them. You and I
pick up the tab for this plan. The funds for this fine retirement plan come
directly from the General Funds-our tax dollars at work! From our own Social
Security Plan, which you and I pay (or have paid) into-every payday until we retire
(which amount is matched by our employer) --we can expect to get an
average $1,000 per month after retirement. Or, in other words, we would have to
collect our average of $1,000. monthly benefits for 68 years and one (1)
month to equal Senator Bill Bradley's benefits!
Social Security could be very good if only one small change were made.
That change would be to jerk the Golden Fleece Retirement Plan from under the
Senators and Congressmen. Put them into the Social Security plan with the
rest of us . then sit back and watch how fast they would fix it.
If enough people receive this, maybe a seed of awareness will be planted and maybe good changes will evolve.
I have done a hoax check and found only that Congress does pay in to SSI.

[eliminatedsprinter]

You had me until you compared it to Congress members retirement plan. Social security was never intended to be a primary retirement plan. Thus it should not be compaired to any real retirement program. It is simply not a valid comparison. That however, in no way makes your first (although unrelated) point any less accurate. The Dems have done more than their share of messing up social security and it is hypicrtical of them to pose as it's protector.
P.S. I know you asked this of Summerlove, but I figured you wanted all of us to read it and add our $.02 or you would have PMd him with it.
[ October 15, 2003, 11:09 AM: Message edited by: eliminatedsprinter ]

[OGShocker]

Thanks for your input! this thread is WIDE OPEN!
I just don't want Catmandon't to respond with some nonsensical Bush bashing BS. :D

[summerlove]

I just got in, I'll get back on tonight when I have more time...
BTW, thanks for the confidence in me and not CMD.
SL wink

[eliminatedsprinter]

So what if Catmando responds? What's it going to do, hurt your eyes?
[ October 15, 2003, 04:47 PM: Message edited by: eliminatedsprinter ]

[summerlove]

eliminatedsprinter:
So what if Catmando responds? What's it going to do, hurt your eyes? I was juuussstt joking...

[Dave C]

You right about the tax increases. SS was not taxed but a portion of the "excess" is now taxed.
Your right about moving the SS surplues into the general fund. Its like saving money for your retirement then spending the money and putting an IOu in your account. That is just criminal. If we did that we would be in jail. It violates ERISA which doesn't apply to the government.
In regards to a SS as a retirement plan, you are right, its not. It should only be considered a supplemental in addition to your retirement savings. I think the max SS payment now is $1,500 per month.
There is a huge welfare portion to this plan, which is why we pay so much but get so little in return. The following is my analysis:
Comparison of Social Security and Pension Plan Contributions
· Retirement benefits paid by Social Security represent a small portion of benefits required to actually retire.
· A person will be required to save for their retirement outside of Social Security in order to provide themselves with a larger portion of their retirement benefit than Social Security will provide.
· A person can accumulate a larger benefit at retirement with smaller contribution in a 401(k) plan than with Social Security.
· Although Social Security benefits are promised , the government faces seriously funding deficiencies after 2017 and benefit will be required to be cut-back.
The benefits paid under Social Security represent a small portion of the benefits required for a person to actually retire comfortably. Social Security promises to pay a retirement benefit that represents only a portion of your average lifetime wages. Wages above the taxable wage based ($72,600) are ignored for benefit calculation.
The average benefit will vary depending on the number of years worked. A person can get a projection based upon their salary history from the Social Security Administration online at www.ssa.gov. (http://www.ssa.gov.) A typical individual who earns on average $60,000 per year will receive about 29% of their average lifetime wages.
Replacement Ratio:
A person will be required to save for their retirement outside of Social Security in order to provide themselves with a larger portion of their retirement benefit than Social Security will provide.
The amount of benefits a retiree receives in comparison to his average lifetime wages is known as his replacement ratio. If earned $60,000 per year while working and earns $45,000 after retirement from retirement income then his replacement ratio is 75%. As the Social Security Administration points out, the replacement ratio may vary from person to person, but a typical American will require 70% replacement ratio. If Social Security will provide a replacement ratio of 29%, this means you will be required to save the difference 41% from other sources, such as personal or company retirement plans.
Comparing the contributions made to a tax-sheltered retirement plan, such as 401(k) against Social Security reveals that a person can accumulate a larger benefit at retirement with smaller contribution in a 401(k) than with Social Security. For example, you are required to contribute 12.4% to Social Security for retirement and disability benefits. If you have an average lifetime wages of $60,000 and work for 38 years until retirement, you will receive the maximum retirement benefit of $1,495 per month. If you contribute 12.4% to a 401(k) plan, you will make an annual contribution of $7,440.00 or $620 per month. We can calculate the accumulation at retirement of $976,060, assuming an after-inflation rate of 5.85%. This accumulation at retirement will purchase a life annuity monthly benefit of $8,214 per month. This means you will receive a retirement benefit of $8,214 per month for life during retirement. Similar annuity payments are available that include a spousal survivorship benefit. . Using the same assumptions, a person who earns $60,000 defers 5% to a 401(k) plan will accumulate $393,572 at retirement, and will result in a life-annuity of $3,312 a month. Saving for retirement using an $2,000 IRA contribution over a persons working lifetime will result in accumulation at retirement of $269,531 which results in a lifetime annuity of $2,268 per month.
The rather large differences highlight the fundamental differences between Social Security and saving for retirement using tax-shelters such as personal IRA’s and company sponsored retirement plans such as 401(k)’s or standard pension plans. As you can see from the example, a 12.4% annual contribution to Social Security will result in a monthly benefit of $1,495 per month. Social Security benefits also include disability benefits for qualified participants and will vary depending on age at disability, average wages, etc. The same 12.4% contribution to a 401(k) plan will result in a monthly benefit of $8,214 per month. That is a difference of $6,719 per month assuming no disability during the participants lifetime. Saving 5% to a 401(k), which is 1/3 less than SS, results in a monthly benefit $3,312. That is $1,811 more than Social Security.
Time Value of Money:
The Social Security system does not use the time value of money in order to pay benefits under the plan. The time value of money means that your savings will generate earnings over time and those earnings continue to compound over time. In our previous example, the contributions to the 401(k) plan for 38 years total $282,720 but the balance of the account at retirement is $976,060. The difference of $693,340 represents the earnings on the account. The compounding effect of the time value of money, especially in the later years, results in the earnings of $693,340 on just $282,720.
Promise to repay:
The Government promises to pay Social Security Benefits but they do not save or invest contributions to the plan. The system works by paying current benefits with current revenues. At the present time there are more people paying into the system than collecting benefits. As the Social Security has acknowledged, this will not be the case after 2017 when there will be more benefit payments than revenue. In order pay benefits the government will be required to raise taxes, cut benefits or raise the retirement age or a combination of these factors.
Social Security does not take advantage of the time value of money but instead relies on the fact that there are more people paying into the system than collecting benefits. Currently, the Government has surplus of funds coming into the plan. But rather than saving this funds as a private pension plan is required to do, they deposit the funds into a trust fund and then issue an IOU, known as a Treasury Security and promptly spend the funds on current Government programs. In other words, the taxpayers are paying interest on funds that are not there.

[CA Stu]

OGShocker:
Is this stuff true?
I am asking you because, I trust you to give me a real response. Unlike CMD. :D
This must be an issue in "04". Please! Keep it going.
SOCIAL SECURITY: (This is worth the read. It's short and to the point.) Perhaps we are
asking the wrong questions during election years.
Our Senators and Congressmen & women do not pay into Social Security and, of course, they do not collect
from it.
You see, Social Security benefits were not suitable for persons of their
rare elevation in society. They felt they should have a special plan for
themselves. So, many years ago they voted in their own benefit plan.
In more recent years, no congressperson has felt the need to change it.
After all, it is a great plan.
For all practical purposes their plan works like this:
When they retire, they continue to draw the same pay until they die,
except it may increase from time to time for cost of living adjustments. For example, former Senator Byrd and Congressman White and their wives may expect to draw $7,800,000.00 (that's Seven Million, Eight-Hundred Thousand
Dollars), with their wives drawing $275,000.00 during the last years of their lives.
This part certainly isn't true. It's an old, worn out internet myth. :rolleyes:
Do a little research, I'm sure you'll find out a page about this inflammatory falsehood that does nothing but make people angry.
Thanks
CA Stu

[eliminatedsprinter]

summerlove:
eliminatedsprinter:
So what if Catmando responds? What's it going to do, hurt your eyes? I was juuussstt joking... This was ment more for OGShocker and I also should have ended it with a wink .

[Dave C]

Actually congress has their own retirement DB plan but the benefits are in line with other retirement plans of their own kind.
SS is not the same thing as a retirement plan.
However, the congressional DB plan has a COLA (cost of living increase). Barely any private DB plans have COLA's. Its is nice little perk.
DaveC<--- employer retirement plan expert, by trade of course.

[summerlove]

In reply to OGS:
One thing I do not want to do is get into a pissing contest (is there a smiley for that???) over the left vs right. I think that there is sufficient blame all around to spread the wealth of stupidity from lawmakers of both parties. I remember watergate and Iran/Contra, so I don't want to get into the specifics of the first part of your questions. I will accept it as correct (I'm not all that familar with SS as I don't participate in that program). One benefit of the retirement program I belong to.
On the other items...
Social Security was originally intended as a supplemental retirement plan for workers, but not as the primary plan. The government at the time of SS's adoption (FDR) was also reliant upon business to provide a pension plan to their employees. While members of Congress, like most other federal, state and local employees, have a retirement plan other than SS, there is a major reason for the plan - we don't have pensions, 401K's, profit sharing, stock options, etc. Now, I realize there are many individuals that don't have these benefits either, but almost all of corporate america has some form of plan or another. It's generally small, mom and pop, self employed individuals that do not receive these other plans.
While I am not certain of the congressional plan, I would call into question the numbers you stated. The plans generally work like this:
At 55 years of age, for example, take the # of years served and use a multiplier, let's say 2.5. So, if a member of Congress retires at 55 and he has 20 years in the system, he'll be able to reitire with 50% of his final salary (2.5x20). That is taxable income. That 50% is only going to be at 50% only if he chooses the highest payout. If he's married, he may elect to choose a lower dollar payout so that in case he predeceases his spouse she'll continue to receive his retirement until her death.
This is a pretty standard method of a public employee retirement plan. Depending on the position and the agency, the multiplier and the eligible age may be different. Cops and Fire, for example, get, for the most part (here in CA), a multiplier of 3 and a retirement age of 50.
I'll give you another example, my wife is a top exec with a very successful, but small company. Her company pays out over $30,000 annually to each and every employee in the form of benefits. She has no medical costs, gets $12K annually dumped into her 401K (in addition to her contributions), has a pension plan, 6 weeks vacation, car allowance, great parties, coroporate jet, etc, etc, etc. Can you imagine the fallout if govt employees had those types of benefits?
Trust me, working of for a governmental agency has it's up's and down's. We're constantly being critized for doing our job, we're always being questioned about how we spend tax dollars, and we're always subject to constant ridicule. We perform or jobs in a fishbowl, with the entire world to see. We don't get paid all that much, and we take alot of public abuse. Do we deserve it, sometimes we do, but most times we don't. The greatest benefit of working for a GA is the benefit package and specifically, the retirement benefits. And, just so you know, I do contribute to a portion of my CALPERS. I am a dedicated public employee and I take my job seriously and I perform it to the best of my ability. I try and make the right decisions, but I mess up at times and make the wrong one, we all do.
That's my thought...
SL

[eliminatedsprinter]

Summerlove
Good clairification. :cool: One point however needs to be added. Since 1984 the federal employees that are under the newer F.E.R.S. do pay into and participate in social security.
God help them. I'm sure glad I hired in just prior to F.E.R.S. becoming manditory.

[summerlove]

eliminatedsprinter:
Summerlove
Good clairification. :cool: One point however needs to be added. Since 1984 the federal employees that are under the newer F.E.R.S. do pay into and participate in social security.
God help them. I'm sure glad I hired in just prior to F.E.R.S. becoming manditory. Very true...