h a l f b a k e r yGuitar Hero: 4'33"
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We’ve all heard and read (those of us in the US, anyway) about what a joke the Social Security System is. It is pretty much a given that the vast majority of us who are forced to continue pumping money into that Ponzi scheme will not see a dime of it upon retirement due to the demographic disparities
looming on the horizon.
As well, even when it ‘worked’, the return on investment was low enough that if it had been a private fund, nobody would have bothered. Coupled with the fact that it’s arguably unconstitutional since you’re taxed on the same income twice (once to purchase the bond the government buys from itself and then again to pay it off), the system is nothing short of forced extortion. People with names like ‘Tony the Hammer’ or ‘Bug Eyes’ Baladucci have gone to prison for schemes identical to this.
So, what to do? Even though I’d drop dead from amazement if it ever really happened, what I’d suggest is a phase out of the system along these lines:
On January 1st, 200X, folks aged 50 or older would have the option of having their FICA extractions reduced by 10%, 25% or 35%. They would, of course have their Social Security payments reduced by that much upon retirement as well, but even in the short period of time left they would be able to build a fund that would match that return anyway.
People between 40-49 would be able to add a 50% bracket to their choices. Ditto with 30-39 year-olds adding a 75% bracket and anybody 29 or younger could opt out altogether if they wanted. The graduated scale is to insure that those who had been paying in for years would not suddenly have the rug ripped from under their feet.
Employers would still kick in the same amount they do now for everybody to avoid cost-based discrimination, but that amount would be cut in half after 10 years (Jan 1st, 201X) and eliminated altogether after 20 years (Jan 1st, 202X).
On Jan 1st, 200X + 25, the system would shut down and all remaining bonds would be distributed in kind to the people still in the system on a pro-rated basis to do with as they pleased.
Your bracket potential would remain the same even if you waited 10 years to actually opt out. E.g., if you’re currently 40 years old and you opted out to the full extent at age 53, you could still do it for up to 50% of your FICA. There would also be an accelerated schedule should people flock to the doors en masse and it became unnecessary to keep money in the system for 25 years.
Again, if this ever really happened, I’d run through downtown naked except for a chicken hat, since it would involve politicians actually surrendering power and money voluntarily. Oh well . . .
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half: They'd be eligible for the same welfare benefits as those who are not of retirement age but for whatever reason aren't working. |
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The fundamental problem with allowing people to opt out of Social Security is that, because no sane person would contribute to it, allowing people to suddenly opt out would cause the system to collapse immediately. Of course, given that the collapse is inevitable, it may be better now than later. |
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The sudden collapse would be avoided by the sliding scale. The closer one is to retirement, the less one is able to opt out; as well, once opted out, the same reduction applies to benefits received - 25% out, 25% less on the getting end. |
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As for "what of the people who opt out and don't invest the additional funds, or lose their investment, or are victims of fraudulent investment schemes? When they're old, starving and living on the street, will the government start up some sort of mandatory program to create a "safety net" for people with no retirement program?", Social Security doesn't offer that anyway. |
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Avoiding cumbersome statistics, it has been proven that stuffing your cash in a mattress will provide a better retirement fund than SocSec. A basic savings account would do 3-4 times better. And, ultimately, unless you advocate Nanny-State Socialism, each of us must be responsible for our own well-beings to an extent. |
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Since it's pure fantasy anyway, it may even be possible to attach a tax credit for invested funds - perhaps to the same extent that SocSec taxes us now - as an incentive to save against the future. |
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[half] Well, it sounds like you are defending them.
Why are they bankrupt? Because they spent a large amount of money on S.S. |
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corcuando: This is both ranty and baked. You can opt out of FICA at any time by avoiding payrolls. |
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There are any number of ways you can receive income -- such as dividends -- that is not subject to payroll taxes. |
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Simplest recipie -- form a corporation, work through that corporation as a contractor, pay yourself in dividends. |
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"form a corporation, work through that corporation as a contractor, pay yourself in dividends." |
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Nice thought. I'm wondering how everybody who works a 9-5 or food service or plant shift (etc.) position would be able to re-engineer those positions so that each and every working person is their own contracted corporation. |
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Doubtful Uncle Sam would just let that slide, either. After the first 30-40 million self-created corporate contractors appeared, they'd find a way to |
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