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Wednesday, February 13, 2008

The Future Has Arrived

From a social science perspective, it is interesting that we make "friends" in the blogosphere. Until the last couple of decades, and actually not even that long, social interaction was done over cocktails or dinner or at a church function or a physical location where people with similar interests gathered. Now we do a significant amount of our socializing online, and we make friends. I would tie this in to Maslow and his heirarchy of needs, but I am not feeling that intellectually motivated today.

One of my blogger friends is Truth-Pain. T-P is an interesting guy, not to mention he has wonderful taste in haircuts. If you read his blog you know that he is apt to disappear for long stretches, followed by explosive lengths of blogging, and the cycle repeats. When most of us do this we lose readers, but I think he has purposefully crafted this reputation to stimulate interest. Whatever the reason, it works because he has a unique style that is both entertaining and thought provoking. Please take a few moments and click HERE for his most recent post that is one of his best of all time. Go read it and then return, please.

I connect his post (with a thin line, yet I pull it off) with the news story that tells us about the first baby boomer collecting her first social security check. For decades we have been warned about the future of social security, and have continued to ignore the imminent truth - the federal government has been taking massive amounts of money from the population and soon that poorly conceived, yet well intentioned effort is about to create massive problems for my children. It will actually create problems for me and my generation as well, but I am resilient and worried more for my children than myself. I have lived in the mud and eaten cold food chased by hot water, I can do it again if need be. My children on the other hand, wouldn't last a week without a text message stimuli......

So we have talked ourselves to death about social security to the point that we don't talk about it much because we know no one will do anything. We have reached a point where we are firmly convined either consciously or subconsciously that the government will bail it out. Or because we rarely ever face the consequences of poor policies that we don't understand what will happen when the bottom falls through. Regardless, the disaster that was coming 20 years ago is here, and we still stick our heads in the sand and refuse to confront it.

Here is my solution to social security. If you are 45 years of age or older, you are guaranteed your social security. Forget the trust funds, forget the pyramid scheme. The government promised that something would happen and now they have to honor their commitment. At 45, people can still start a 20 year career somewhere to build retirement and still not reach the minimum age for their benefits. They have time.

For those under 45, we forfeit everything we have contributed. We no longer contribute to social security. Before you wail, keep in mind that the government already has it, and will find ways to tax you to make up the difference in a few years anyway. Foresaking your contributions now actually saves you money.

We forfeit our contributions, and get nothing at retirement from the government. However, they have to get our of my way and allow me to invest as much as I want however I want with no tax obligation, and that includes capital gains.

Simple. Common sense. And everyone wins, except for politicians that will be forfeiting some of their ability to hold issues over the heads of elderly people.

But isn't that a good thing?

13 Posts From Readers:

TRUTH-PAIN said...

... anybody who can wax poetic on my long flowing mane is a good guy in my book.

Robert, thanks for the link-up to my post. Its funny (and troubling :)that what I thought was an off-the-cuff, nonsensical and melo-dramatic posting finds an appreciative audience somewhere. I am very thankful to have you as a friend and online colleague. As you can see by both our blog-rolls and "regulars", we land on the same branches and have quite the mutual admiration society. I feel like I know Brooke, Mustang, Obob and you more that some of my own posse... (did I just say Posse?).

As to the theme of your posting, It really does make sense, and I've heard some versions close to yours as of late from some of the Primary pundits out there. There is no doubt that a segment of the populace is going to have to take it in the shorts and accept that they are on their own as far as getting anything from Uncle Sam. Every single area of entitlement is going to have to meet its "maker" one day,... Social Security will (should) be first in line and this generation will be the first to fall on its own sword for the good of the future. I don't even think its the 3rd rail of politics any more. When entitlements are inching up towards the 70% (correct?) of the Federal budget you wonder when the hell we are going to smell the coffee at all.

Lastly, it seems to me that one of the main reasons no one is "aware" of how much goes out on their payroll checks to Social Security and other taxes is that they don't make the math connection of the percentage that is taken out of their gross check. Most people see the net as "real"... without putting much thought into anything else. It would be comical (or suicidal) if we had to actually write checks out every pay period for all the taxes and deductions that we pay out. THAT would be the singular moment of clarity that would make people go "what the F**k is going on here?....

Again, your kindness in mentioning my feeble gifts is very much appreciated. As always, mi casa es su casa..... Semper Fi

Robert (Conservative Commentary) said...

T-P, as always you are most gracious.

I need not add to your comments, except for one point. You mention the percentage of the income that is taken for social security and taxes. I look past that and see the percentage that I will NEVER see because of the deductions.

I am talking of the massive returns that could be gained from private investment. Instead of giving the government $100 a payday or whatever it is, I could put that in my own investments and have a couple of million upon retirement, instead of hoping to see a $2000 per month benefit from social security.

THAT is the part that gets my goat. What I am missing out on, and the principle of the government holding my own money over my head as if I am a dolt.

TRUTH-PAIN said...

... True Dat!

You know what would be interesting? A side by side comparison of a 65-year old who just retires on his SS, and another who could have opted out since the beginning (like the luck bastards in Galveston) and invested in the regular stock market, money market funds or real estate with the same amounts. Even extrapolating for the few recessions and market dives here and there,-and using a conservative 7.5% annual grown of market worth throughout the years-, the comparisons are going to be staggering.... no?

The Liberal Lie The Conservative Truth said...

You know FDR's mom, a Republican, refused to pay Social Security and he paid it for her to keep it out of the press ? A little Presidential trivia.

Great idea but the Dems won't let it happen because they use SS as a contolling factor over seniors and poor Democrats who still believe their lies!

rockync said...

Robert, that is a most sensible solution to a burgeoning problem that will not be better AND, in fact, has been getting steadily worse as you pointed out. I think the sticky wicket here will be the transitional generations who must now learn a whole new mind set. We were raised to work, pay our taxes, enjoy life and when we retired, the government would send you a monthly paycheck. Reality check; that money is barely sustainance and for many, it doesn't even come close. Our SS program is a classic example of "nanny government" and the damage it does. If we implement your plan,some of your generation and probably some of the one behind you will struggle with the concept of retirement planning. What do we do with those who don't plan for their future? Do we let them starve, die of disease? I know most will take the hard line of "if they didn't act responsibly, they pay the consequences." But can you watch the old guy next door slowly waste away? Will you burden yourself with a sibling or relative that didn't plan well? We certainly will haave to examine the negatives and decide how to deal with them on a viseral level and not just theoretically.

Robert (Conservative Commentary) said...

Rocky, I agree that there is a hardship required on the part of many. I would assert that the younger generation, meaning those younger than me (I am 41) have more potential to appreciate investments and wealth than my generation. They have lived through the internet bubble and seen fortunes come and go. They realize that theirs is the generation who will have to deal with not having a social security net if things don't change. I don't think the mindset would be too difficult to divert.

I would say that it is those of my generation who would cry about giving up their contributions so far. My generation has not had the pleasure of company pensions and retirement programs that result from staying with a company for 20 years like our fathers.

The 45 cut-off would give those of that age a chance to spend the next 20 years preparing. It would not make up for the same investment done 20 years ago, but it could present a better quality of life retirement than relying on social security.

As a culture we don't save. That is due in part to not having a need...we count on a social security check and instead spend out money on ipods and computers and things that are indulgences.

I do think you have some good points. While I don't think that we should make national and/or fiscal policy on an anecdotal basis, individual circumstances can prevent mistakes from unintended consequences.

T-P, I had a post some months ago with a calculation at saving $300 a month beginning at age 21 on a 9% return for 40 years. I will have to dig it up, or either run it through the calculator again. It was far more than my current benefit of $2400 a month as estiomated by teh SS office. besides, I could use my own investments many years before the 67 age that I have to achieve now.

rockync said...

Robert, I think you have stated your case very well and I would like to see the concept developed into something tangible.

Anonymous said...

I completely agree, I've already visited T-P's and loved the post.

I's pretty ironic to me, that you can come up with a simple and well thought out plan and our legislators can't. I'm actually suprised that it hasn't come up more during all these election debates. It is a huge problem and simply ignoring it will not make it go away.

TRUTH-PAIN said...

I found that post, ... thanks,...i copied some of the info for a posting I have in the oven,...

TRUTH-PAIN said...

by the way,... its time to have some fun before the weekend,... come on over :)

Obob said...

I am practicing my second career,
"welcome to wal-mart"

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