Social Security, or Socialist Insecurity?

[memoriesbymichelle]

While I might not like the idea that there might not be social security for me whenever I retire (if they don't keep upping the age!!!) Right now I get social security for my kids since their dad died and if I did not get that money I think we would be out on the street, I could not and really almost still can't make ends meet. And if they did away with it right now, well I shudder to think of that thought. I already don't know how I'm gonna make it when my youngest turns 18 and I don't get that money anymore.

 

[AirForceTeacher]

Either way, I think SS will be useless in a good ten years or so.

Every estimate I've seen says that receipts will equal about .75% of payout at its lowest dip, then the tide swings back. If they end the contribution cap, then that should go away. My issue is the other solution often proposed: means-testing. If I paid it, I should get it no matter what I make from my other investments. Right now, my retirement plans are a combination of my investment property, my miiitary retirement and my SS projection. I'll have about 20 years of post military 401k investment to finish off. However, if some bureaucrat artificially determines the "means max" to be lower than what I think I need, then I lose what I've paid into for 50 years?

 

[MacFall]

There are some Herbert Spencer's here lol.

Not quite, but I do like some of his work.

 

[MacFall]

Every estimate I've seen says that receipts will equal about .75% of payout at its lowest dip, then the tide swings back. If they end the contribution cap, then that should go away.

Even so, if inflation continues at even half its current rate (and it's almost certain that the rate will continue to increase in the long run) then even that 75% will be worth a fraction of its value when it was paid in.

 

[AirForceTeacher]

Even so, if inflation continues at even half its current rate (and it's almost certain that the rate will continue to increase in the long run) then even that 75% will be worth a fraction of its value when it was paid in.

Inflation is already accounted for by COLA.

 

[MacFall]

Current inflation. It does not account for the increasing rate of inflation, which rate is itself increasing at an increasing rate.

 

[AirForceTeacher]

Sigh. COLA is computed using the CPI. Every year the CPI in computed by comparing the cost of a set list of items with the cost last year. It is based upon things that normal people buy on a regular basis, like bread, milk, etc. I think durable goods are also included, but too lazy to Google right now. Since this is computed every year, then current and future inflation is accounted for.

Personally, I'd love to get my SS contributions back to invest in mutual funds, but not everyone has the ability to do that safely. Even now, I'd be concerned because while stocks are and have always been a great 20 year investment, that's not necessarily true for a five year period, as we've learned of late.

 

[MacFall]

No, it is not accounted for. The CPI is an inaccurate way of measuring inflation in the first place, and it does not predict future increases in the rate of inflation.

 

[AirForceTeacher]

How can CPI not address future inflation - it's computed every year.

 

[MacFall]

Because the rate of inflation does not always follow a linear progression, and the CPI does not account for increases in the rate of inflation. Plus, the CPI is a crappy way of measuring inflation anyway. You can't get good predictions with bad data.

 

[jameseb]

The CPI is the most commonly used measure of inflation, and generally considered the "best" measure of inflation in regard to consumer expenses.

However, there are various indices one should reference depending on the aspect of inflation you want to analyze.