From: bboerner@novell.com (Brendan B. Boerner)
Newsgroups: tx.politics
Subject: Re: Social Security
Date: 31 Dec 92 20:06:20 GMT
Distribution: tx
Organization: Novell, Inc. --Austin

In article <1992Dec27.190501.9404@rpp386> jfh@rpp386.cactus.org (John F. Haugh II) writes:
>In article <Bzvw5J.1KEo@austin.ibm.com> curt@ekhadafi.austin.ibm.com (Curt Finch 903 2F021 curt@aixwiz.austin.ibm.com 512-838-2806) writes:
>A person making $55K (which is the actual cutoff point, it would be
>nice if you had the facts straight when you go to make an argument)
>average over their lifetime at the current FICA rates will pay in
>$7150 per year, or $336,050 if they work 47 years (age 20 to age 67).
>The same person making $20K will pay in only $122,200.  The monthly
>benefits for the first person will be approximately $1,491 and the
>second $878.  (From SSA Pub No. 05-10024).  Using an average life
>expectancy of 75 (average of male and female life expectancies),
>the total retirement benefit of the first person is $143,136 and for
>the second it is $84,288.  The first person receives $.43 per dollar
>of contribution, and the second person receives $.69 per dollar of
>contribution.

I think your analysis is applicable to _future_ retirees, not someone
who has now retired for the simple reason that the rates were quite low
until, what, the mid-80s, when they were raised to supposedly make the
system actuarially sound for the retirement of the boomers.

I've heard the figure that Joe Blow, retiring today, will receive his
benefits back, accounting for inflation in between 2-4 years.  The 4
year figure comes from the 60 Minutes episode a few months ago with
Leslie Stahl who attended a workshop in Denver where people try to see
how hard it is to balance the Federal budget.  She also mentioned that
Jeremiah Blow, Joe Blow's son, aged 30ish and upper middle class, will
take 13 years to get all of his benefits back.  This corresponds with
your idea of someone retiring at 67, and dying at 75 not receiving all
of their benefits.


>>It's a little perverse isn't it?  The richest segment of our
>>population, the aged, receive continuous handouts from young wage
>>earners far in excess of their own contributions when those same young
>>people have not a prayer of ever collecting this freebie themselves.
>
>This is also not correct.  The rich, under the current funding arrangement,
>will receive 43 cents on the dollar.  The poor, while still screwed, will
>receive 69 cents on the dollar.  The ratio is 1.6 to 1 - in favor of
>the poor.

Note "current" funding arrangement.  What Curt is talking about is the
clash between past and current funding arrangements.  The current
retirees were NOT paying in 15.3% a year for 47 years, it was far less,
and they've already received what they paid in and more.  The system is
taking from the current wage earners and paying to the retirees.  John,
you may be able to make the case that someone who has been rich for the
last 47 year IS getting screwed out of his fund, but it's irrelevant
(in discussing how to currently fund SS; not to him I'm sure) because
he's not the one draining the system, it's the one who've already
received benefits in full and are still receiving them.


As you've pointed out, the guy now making 55K a year for the next 47
years is going to get screwed by SS.  The sanest thing we could do is
phase out SS and let him make his own decisions about how to fund his
retirement.  Sound reasonable?

Brendan
-- 
Brendan B. Boerner    Phone: 512/346-8380    MHS: bboerner@novell
Internet: bboerner@novell.com     \  Please use either if replying
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Newsgroups: tx.politics