SSA Reform: What to do....
Mostly a ramble, although I will link to some opinions.
Were it up to Star Parker, SSA retirement & disability would be done away with!
The idea [I have been notified by one of my coworkers that Dubyatron has no actual “plan”; he’s just “pushing” the personal accounts] is basically: Everyone in the country gets something akin to current federal government employees’ Thrift Savings Plan, which is...
...a 401(k)/IRA savings account that you cannot touch until you retire or die. [I have something similar with my state retirement account.] The only real difference between this and what we have now is that with the PRIVATIZATION PLAN, my near & dears will get whatever monies I plugged into the 401(k); whereas now, the family will get $255 if I die before the target retirement age.
[This happens to enough “Afrimericans” that it should be a real concern, considering any minimum-wage employee can generate $255 of SSA taxes(FICA) in 4-6 pay periods--a max of three months.]
Speaking of which...have you ever asked yourself when you first joined the workforce...
...what the FLUG is FICA!?
I did, when I started working at fourteen. I understood Federal Tax, State Tax, Medicare: the first is Uncle Sam’s cut, the second is the Palmetto State’s cut, and the third is for health care. [KiM: I was, again, fourteen; hence the oversimplification.]
But FICA, apparently, is some obscure code acronym for Social Security. The idea being that I put in my two bits now, and I get it back later when I’m old.
Except...it doesn’t really work that way. Oh, no. What actually happens is I put in my two bits to pay for my grandmother’s retirement bennies. IOW, a tidy little sum per paycheck is gone, gone forever.
Now, now, you say; Uncle Sam will pay your money back when you retire.
Sure--if I’m 40 & over. If not...I lose about 27 cents per dollar. Joy! And if I die before target age, I get $255. Yippers.
[I’m actually rather miffed with this matter.]
But in order to understand where I’m coming from, and why I’m supporting President Bush on this matter, I could point you to people who are much smarter and more versed in economics than me.
[--for example: Here's a reproduced clipping, a letter in my local paper, that articulates my opinion better than I do.--]
[I won’t, however, recommend Paul Krugman. With all due respect to one who teaches economics @ Princeton, I think I can handle basic arithmetic for myself.]
However, all I really need...is my paystub! Behold:
[above: my paystub, doctored for my protection. highlighted is my FICA amount per pay period, and my YTD FICA as of 11/16/04.]
The YTD FICA is what I’ll use for my calculations. That would be $1373.45 as of November 16, 2004. [that, BTW, represents 22 pay periods in 11 months.]
Okay:
I’m going to compare SSA’s 1% return to the “in excess of 3%” return the evil PRIVATIZATION could provide. [Let’s say...3.2%.]
1% of $1373.45 = 13.7345 ~ $13.74
3.2% of $1373.45 = 43.9504 ~ $43.95
Now, I’ll find out how much compound interest will accrue between my two principal amounts [FICA & PRVT] over a period of 20 years:
FICA
13.74 x 20(1.01)
13.74 x 20.20 = 277.548 ~ $277.55
PRVT
43.95 x 20(1.032)
43.95 x 20.64 = 907.128 ~ $907.13
If my arithmetic serves me right, $277.55 is less than $907.13; or another way, $907.13 is greater than $277.55.
I’m going to calculate the difference betwixt the two:
$907.13 - $277.55 = $629.58
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a basic accounting shortcut:
If you want to find out what an amount will be after you add/subtract in the percentage[KiM: percentage = decimals], you do the following(sales tax & % discounts are two main uses):
adding 6% sales tax: x 1.06 - the “1” automatically adds in the principal when you multiply, saving you the step of finding out the percentage’s decimal and adding it to the principal to get your full total.
subtracting 15% off: x .85 - all percentages add to 100%, or 1.00. in this case, you subtract the percent of 100 that you’re trying to take off [here, 100-15] and you get the difference. you multiply the difference to your principal to find your discount price.
***
[please let me know if my setup here is wrong....]
= = = | = = =
$629.58....
That’s a computer. That’s my rent and groceries. That’s a tidy DVD collection. Or two to three car payments.
Now, it’s not much, but it’s mine....
I worked for that $1373.45, about 6% of my pay as of 11/16/04. [My employer pays about another 6% on top of that, to an approximate total of 12% SS tax.]
As it stands now, this amount goes to my grandmother to pay her benefits. The idea being kicked around Congress is that I can invest some of this in a 401(k) at a good interest rate.
PRIVATIZATION won’t make the SSA system solvent by itself; no, the traditional bennies I’d normally receive around target age would probably be reduced by the amount I chose to plug into my personal account[again, akin to a 401(k)].
But it’s a start, at least from where I see it. Where Mr. Krugman lost me is when he mentioned “borrowing” and playing the “risky stock market”. For one, it’s nigh impossible to borrow my OWN money. Those figures you saw above are based on my pay stub. And two: I appreciate Mr. Krugman’s feelings. He, like my coworker [who handed me two of his NYT columns], is worried that I’ll blow my “safe” retirement funds on Wall Street.
Except I already have a 401(k) and a 457 [which has accrued over $1000 since I last looked at it]; plus my retirement 401(a). I know how those work. In all three, I allocate a certain percentage to different types of investments. [stocks, bonds, etc.]
[* and that’s just a state government package. there are probably better ones out there with the private sector. -think Wal*Mart-*] I also have a traditional IRA outside my job. I am not alone, either.
Thus, I’ve concluded based on what I know, what I’ve heard of the issue, and on the math; that Mr. Krugman is too worried about what I choose to do with my money. Basically: he did his best to “warn” me, and I’ve chosen not to listen to him. If Mr. Krugman’s right, and I blow my retirement; I blow it. Hopefully, I can accept being wrong--because I could be wrong--with the grace and dignity I’m trying to display now.
Because there’s also other math involved. According to every official estimate, the trust fund pot becomes exhausted(and I lose 27 cents per dollar) in 2042. The year 2018 marks the beginning of the end.
This year(2005), I’ll be 29. In 2018, I’ll be 42; 24 years later(2042), I’m 66. Presuming that I can still withdraw my bennies at 65(and actually, it’s 67 now; I know), I actually lose money, not even getting what I put in back. Not...fun.
Hence my push now to save for my retirement.
= = = | = = =
In both cases, I’m dealing with money I may never see. I could lose this cash. With “risky” Wall Street[the 401(k)], I know it’s a risk; I chose this risk. With “guaranteed” SSA, I was told that I’d get my money back; yet it looks like I’m not going to get it.
For The Powers That Be: leave it up to me. I’ll take my chances with Wall Street.
It’s my money.
:: afterthought ::
Isn’t it curious? Anti-republicans/conservatives/etc. think that being right is of greatest importance, more important than a person’s choice to risk being wrong.
Atheist(sorry, deiphobe--real atheists don’t scream like this): THERE IS NO GOD!
me: Various theist[THERE IS A/ARE GOD/GODS!] doctrines could win more people over(ex. Christianity) if they’d acknowledge that their knowledge of God is based primarily on faith; the empirical data is inconclusive. IOW, the empirical--material--evidence of God’s existence/nature/etc. is non-falsifiable by scientific means. [we couldn’t reproduce the conditions for the universe’s existence if we tried.] Having said that, I do think atheists are being a bit close-minded about the matter. Our material, factual knowledge of the universe is quite limited. If there isn’t a deity, no one will know because said deity never existed. We all just die. If there is a deity, and he/she’s as righteous as the holy writs say, they’ll judge us. [and I’m certain Allah is something...but not any sort of god. his chosen prophet is simply too wicked.]
Pro-Choice: A woman has the right to control her body.
me: Fair enough. The baby[HUMAN fetus/embryo/protoplasm/ball of cells] also has a right to...be born. It’s too bad people can’t discuss this without screaming. [If only it didn’t involve cute, cuddly babies....] The real issue is that teenage girls are cavorting/forced to cavort with middle-aged men; and who gets left with an “unplanned pregnancy”? The teenage girls and their parent(s). I have witnessed teen pregnancy in my sister. It’s fun to have a nephew. It’s not fun to have him cry at 3am. when you’re not quite 10. These teens are still kids; and they want to do fun things; not care for an adorable but needy youngster. These girls don’t want to work at McDonald’s and deal with school and care for the baby. And not all of them chose to have sex at their age. If they go to Planned Parenthood, they push abortion as the best answer ever. [Adoption? What’s that?] Abortion is freedom.... And being self-absorbed kids, they probably don’t even “agonize” over the decision at the time. It’s only when the teen sees an actual baby(as she matures) and she thinks about it that the guilt may sink in. While a woman has the right to her body, the other body inside her womb is its own person. What do we do here? There’s no simple answer. [and yes, I’m well aware that Pro-Life is one-note as well. at least they mention all the options when crying that the teen should have the baby.]
Diversity: We are a multicultural salad, and we have to appreciate our differences.
me: I’ve seen salads. I don’t like cauliflower, radishes, and definitely not hard-boiled eggs in my salad. And I’d spend too much time picking out the parts of the salad I don’t like; or I’d try to order the salad ingredients I do enjoy. If you give me no choice but to have the yucky ingredients in my salad, I simply won’t order the salad. [That, in a nutshell, is gentrification/white flight.] But we’re not a melting pot, either. That implies that we’re all the proper, listed ingredients for cheese fondue. What we Americans are: we’re a tasty smoked sausage. While we know about its pork & beef content; the more we learn of how it was made, the less we like it. But this is presuming you want to spend time and energy learning about sausage manufacture. Apart, sausage ingredients can be bland, yummy, or nasty; together, sausage is tasty. Let’s just eat and enjoy. :D On that note, while there are many differences, let’s also look at what we have in common. What do we share as Americans? As human beings? How do our differences work together? True diversity is e pluribus unum, how disparate parts of other cultures become one tasty, meaty sausage.
Environmentalist: We must end global warming, recycle, and quit depending on fossil fuels; else 500 years from now, we’ll suffer a nuclear winter. And we must save the rainforest and endangered species.
me: I don’t want to. You can’t make me. 500 years from now, I’ll be long dead, and my descendants will live on a moon orbiting a terraformed planet in Alpha Centauri. You can’t force me to buy a fuel-efficient car, simply because I may not want one. No matter what governments and “evil” corporations do or do not do, the cost/benefit analysis of solar, wind, and biodiesel will remain the same for the next century. The best thing to do in the meantime is to liberate the ME so that the Oil Reserves(t m) aren’t under the control of cruel dictators that murder their own people....
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The general tenor is: think as I do, live as I do, eat as I do, breathe as I do; for I am right and you are wrong. Be right. Be me.
my counter: Leave me alone, and let me be wrong. You be you, and I’ll be me. Okay? :)
