CONTENTS
It is only a right to choose an option, not a requirement
A guarantee for even the personal account investor
Special, guaranteed enhancement for lower income people
No changes for over 55 now, and survivor or disability recipients
Now the bad news - for the higher income people who are now under 55
Overall safe, with great upside and enhancement for lower income people
And then, sorry folks, there is the age of retirement thing (up 1 month/ every 2 yrs.)
No need to read and understand, just keep the account the same as it is now, no
sweat, no risk, just the same!
Appendices:
Excerpted Retirement Security section of Ryan's plan
Examples of obvious bias, unkind, and unreasoned remarks
_______________________________________________________________
INTRO
Incredibly naive but convinced rhetoric condemns the private account option as creating a disaster and "ending" social security. But they obviously haven't read and/or not understood the proposal by Ryan, copied at the end of this piece for your perusal.
After the excerpt of the Retirement Security section from Ryan's plan, are a list of obvious rhetoric not based on rational thinking nor on kindness and fairness.
Instead of having the social security dollars sitting in IOU's from the government so that the government can spend it, you will be providing more capital for our country to grow faster, so we'll all be more prosperous. A very intelligent option.
IT IS ONLY A RIGHT TO CHOOSE AN OPTION, NOT REQUIRED!
Having a "right" to exercise an option does not exclude the right to keep things the same. So, for people who choose to stay the same, there is no difference, there is no threat; they still are "protected" [though at very the low rate that social security has returned].
A GUARANTEE FOR EVEN THE PERSONAL ACCOUNT INVESTOR
Guarantee of Contributions: Individuals who choose to invest in personal accounts will be ensured every dollar they place into an account will be guaranteed, even after inflation.
[This return, assuming even mild inflation, would be higher than the current social security system would produce.]
SPECIAL, GUARANTEED ENHANCEMENT FOR LOWER INCOME PEOPLE
Lower income people, provided they have worked the required amount of time, will receive guarantees of enhanced minimums that are greater than they would get under the current system.
NO CHANGES FOR OVER 55 NOW, AND SURVIVOR OR DISABILITY
Nobody 55 or over is affected by the enhancements.
NOW THE BAD NEWS - FOR THE HIGHER INCOME PEOPLE WHO ARE NOW UNDER 55
The new indexing system would be to keep up with prices but not overadjust beyond inflation. The old wage indexing system went up at a higher rate. As the amount of income that is taxed for social security while working goes up, the price indexing percentage goes up.
Two excerpts from the plan copy below:
"These changes will ensure the system favors those individuals who are most reliant on it for support."
"In fact, according to a distributional analysis by the CBO, lower-income workers should see an increase in their benefits above currently scheduled benefits."
Those who make $27,700 (in 2018, when the system starts) will have no adjustment and will remain the same. As people rise in social security income, they will shift more over to the more modest inflation only adjustments - which is fine, as they are the ones who don't need the enhancements!
OVERALL SAFE, WITH GREAT UPSIDE AND ENHANCEMENT FOR LOWER INCOME PEOPLE
Plus we will not have to go through a very expensive rescue of social security that is portended here.
And those who take a little bit of extra risk with 41% or less of their yearly contributions are guaranteed against a downside.
Pretty smart, I would say.
AND THEN, SORRY FOLKS, THERE IS THE AGE OF RETIREMENT THING
Financially, the guaranteed retirement part must adjust for increasing longevity, where it has to pay out for more years. Still people can retire early, as now, but at a reduced rate that reflects the years expected until death - that's not much of an adjustment, but it is a consideration. People who have the private accounts would be expected to retire even earlier but at a higher income level - so they're not negatively affected.
I'd recommend that everyone invest at least 2% (and leave the 10.4% in the regular account) and then switch to the age adjusted investing strategy funds that gradually get more and more conservative - this approach should be very safe, yet it will allow the earlier retirement.
NO NEED TO READ AND UNDERSTAND JUST KEEP THE ACCOUNT THE SAME AS IT IS NOW, NO SWEAT, NO RISK, JUST THE SAME!
And the problem is, of course, people understanding it if they want to know all the details.
If they don't want to read all the details, all they have to know is that
1. They don't have to read the details
2. They can stay in the non-private account social security - so there is nothing to
worry about!!!!!!!!
[The quote from the plan:
"The choice of personal retirement accounts is
ENTIRELY VOLUNTARY.
Even those under 55 can remain in the current system if they choose. Further, those who choose to enter the personal account system also have an opportunity to leave the system..."]
There is choice, so everybody who chooses can stay the same!!!!!!
[The Republicans need to make this point clearly, as few people will did in deeper. And even the private account people don't have to be concerned, as there is a guarantee there also. The Republicans should also provide a site with examples of different scenarios, so that people can see an example that might apply to them.]
EXCERPT from the Ryan Plan, for your reading for the facts and the logic:
(I have highlighted the parts that most people would be concerned about and those where the politicians and biased most often are in error. This will permit you to scan to the highlighted parts, if you wish.)
RETIREMENT SECURITY
More than 30 million Americans depend on Social Security to provide a significant share of their retirement income. Since the program was enacted in 1935, it has served as a vital piece of the “three-legged stool” of retirement security, which today includes employer-provided pension plans and personal savings. Still, President Roosevelt himself viewed Social Security as an evolving program. As he wrote in a 1939 message to Congress: “We shall make the most orderly progress if we look upon Social Security as a development toward a goal rather than a finished product. We shall make the most lasting progress if we recognize that Social Security can furnish only a base upon which each one of our citizens may build his individual security through his own individual efforts.” In this regard, Social Security is one critical piece of the retirement security safety net for seniors – especially those with limited incomes.
As currently structured, however, Social Security is going bankrupt and cannot fulfill its promises to future retirees. Without reform, future retirees face benefit cuts of up to 24 percent in 2037. Attempts to fix the problem without fundamental reform will excessively burden future workers and sacrifice U.S. prosperity.
Further, even if the current system could be sustained, it is no longer a good deal for American workers. The real rate of return for current workers is only about 1 percent to 2 percent, and the expected rate of return for today’s children is expected to fall below 1 percent. [Comment: that is pretty poor, and I might say "intolerable".
Social Security’s shrinking value and fragile condition pose a serious problem that threatens to break the broader compact in which workers support the generation preceding them, and earn the support of those who follow. To maintain the program’s significant role as a part of the retirement security safety net, Social Security’s mission must be fulfilled somehow. The legacy envisioned by President Roosevelt must be completed without bankrupting future workers.
This proposal addresses the shortcomings of the current system and strengthens the retirement safety net by providing workers with the voluntary option of investing a portion of their FICA payroll taxes into personal savings accounts. Due to the higher rate of return received by investments in secure funds consisting of equities and bonds, these accounts would allow workers to build a significant nest egg for retirement that far exceeds what the current program can provide. [Comment: with "compounding" that appears to be more than a true statement.] Each account will be the property of the individual, and fully inheritable, which will allow workers to pass on any remaining balances in their accounts to their descendants.
Individuals 55 and older will remain in the current system and will not be affected by this proposal in any way: they will receive the benefits they have been promised, and have planned for, during their working years. All other workers will have a choice to stay in the current system or begin contributing to personal accounts. Those who choose the personal account option will have the opportunity to begin investing a significant portion of their payroll taxes into a series of funds managed by the U.S. government. The system would closely resemble the investment options available to Members of Congress and Federal employees through the Thrift Savings Plan [TSP]. As these personal accounts continue to accumulate wealth, they will eventually replace the funding that comes through the government’s pay-as-you-go system. This will reduce the demand on government spending, lead to a larger overall benefit for retired workers, and restore solvency to the Social Security Program.
As with Medicare, the Social Security component of this plan will make the program sustainable for the long run. It will do so without overtaxing future workers and crippling the economy. Based on estimates by the CBO, the program will be solvent with permanent and growing surpluses by 2069, without requiring general fund transfers. [Comment: In other words the CBO estimated average expected returns on investing would extend the solvency beyond the now expected insolvency in 2037, plus have surpluses thereafter!] While not incorporated in the plan, these surpluses will make it possible to reduce the regressive payroll tax in the future.
In addition, the creation of personal investment accounts for future retirees will provide additional capital stock for the U.S. economy, increasing the potential for growth. This will be especially important in coming decades in helping compensate for the projected slowdown in labor force growth, a key component to increases in GDP.
Guarantee of Contributions. Individuals who choose to invest in personal accounts will be ensured every dollar they place into an account will be guaranteed, even after inflation. With the recent market downturn, individuals must be assured their retirement is secure. By guaranteeing the dollars put into an account, individuals can be assured that a large-scale market downturn will not cost them their Social Security personal accounts.
Personal Choice in Retirement Accounts. Beginning in 2012, the proposal allows each worker younger than 55 to shift a portion of his or her Social Security payroll tax payment into a personal retirement account, chosen from a group of investment funds approved by the government (see below). When fully phased in, the personal accounts will average 5.1 percentage points of the current 12.4 percent Social Security payroll tax. [The maximum put in is less than 1/2 of the contributions.]
The personal investment component is phased in to allow a smooth transition. Initially, workers are allowed to invest 2 percent [1/6] of their first $10,000 [$200/year] of annual payroll into personal accounts, and 1 percent of annual payroll above that up to the Social Security earnings limit [at the maximum level that would be $960]. The $10,000 level will be indexed for inflation. After 10 years, the amount that workers can invest will be increased to 4 percent up to the inflation-adjusted level, and 2 percent above that. After 10 more years, these amounts will be increased to 6 percent [$600 before inflation] and 3 percent [$2700 before inflation]. Eventually, by 2042, workers will be able to invest 8 percent up to the inflation-adjustment level, and 4 percent of payroll above that, for an account averaging 5.1 percent [maximum, for those who choose that].
The choice of personal retirement accounts is entirely voluntary. Even those under 55 can remain in the current system if they choose. Further, those who choose to enter the personal account system also have an opportunity to leave the system, and those who initially opt out of the system of personal accounts can enter into it later on.
Property Right. Each personal account is the property of the individual, and the resources accumulated can be passed on to the individual’s descendants. This contrasts with current government Social Security benefits, which are subject to reductions or other changes by Congress, and which cannot be passed on. The benefits of the personal accounts are tilted in favor of low-income individuals who do not have disposable income to invest. As a result, these individuals will be able to join the investor class for the first time. As Social Security benefits become an individual’s property, the government no longer will be able to raid this money to pay for spending on other programs.
Soundness of Accounts. Those choosing the personal account option will select from a list of managed investment funds approved by the government for soundness and safety. After an account reaches a low threshold, a worker will be enrolled in a “life cycle” fund that automatically adjusts the portfolio based on age. [Comment: This reduces the risk far below what it would be if people just kept investing as a younger person would.] A worker may continue with the life cycle option or choose from a list of five funds similar to the Thrift Savings Plan options. After workers accumulate more than $25,000 in their account, they can choose to invest in additional nongovernment options approved by the Personal Social Security Savings Board.
Protection for Current Retirees and Those Nearing Retirement. As with Medicare, this plan recognizes the obligation to preserve the existing Social Security Program for those who already are retired, and for those near retirement who have planned on its benefits for most of their working lives. Therefore, persons now retired and receiving Social Security benefits, and those currently 55 and older, will remain in the existing system and will receive their promised benefits. Their benefits will in fact be more secure because the transformation of the program, along with other reforms in this proposal, ensures the Federal Government will be able to pay promised benefits.
Enhanced Benefits for Low-Income Americans. Low-income Americans are likely to benefit most from the personal account arrangement, should they choose it. They will have an unprecedented opportunity to join the investor class and increase their personal wealth, and also will be allowed to have larger personal accounts than others. Further, both those who remain in the current system, and those who opt for personal savings accounts, will receive increased benefits. All individuals in the traditional system who meet certain working requirements will be ensured that their minimum benefits are equal to at least 120 percent of the Federal poverty level, an improvement from current law. Those in the personal account system will be guaranteed a minimum of at least 150 percent of the Federal poverty level.
The use of progressive price indexing for lower-income workers (see below) will also allow the benefits for lower-income workers to grow faster than those who have greater means to provide for their retirement. These changes will ensure the system favors those individuals who are most reliant on it for support. In fact, according to a distributional analysis by the CBO, lower-income workers should see an increase in their benefits above currently scheduled benefits.
No Change for Survivors and the Disabled. Those receiving survivor and disability benefits will see no change.
Fiscal Sustainability. The plan makes adjustments in the determination of future initial Social Security benefits that will modernize the program, provide greater support for lower-income beneficiaries, and at the same time make the program’s overall spending sustainable for the long run. This would continue to allow benefits to grow for all individuals. Further, it would only affect individuals under 55. To accomplish these objectives, the proposal uses progressive price indexing and modernizes the Social Security retirement age.
Progressive Price Indexing. At present, an individual’s initial level of Social Security benefits are based on the individual’s average career earnings. To determine average career earnings, an individual’s income from previous years is adjusted upward by the rate that average American wages have increased over time. This approach, called “wage indexing,” exceeds the amount of initial benefit growth needed to keep pace with economic conditions, and contributes to the unsustainable projected burden on Social Security. An alternative approach is “price indexing,” under which initial benefits are adjusted according to the consumer price index. [Comments - I'd like to see some specific examples of how that turns out, but should be ok for all, with less for the rich, as discussed below.]
This reform, starting in 2018, employs “progressive price indexing” – a mix of wage indexing and price indexing – for initial Social Security benefits. Individuals who make less than approximately $27,700 per year will continue to receive initial benefits based on wage indexing. Those who make between $27,700 and $149,900 (in 2018) will have their initial benefits adjusted upward by a combination of wage and price indexing that becomes more oriented toward price indexing as they move up the income scale. For example, an individual whose income is half way between roughly $27,700 and $149,900 will have his initial benefit adjusted upward approximately 50 percent by wage indexing and 50 percent by price indexing. Individuals making more than $149,900 will have their initial benefits adjusted upward by price indexing. These amounts will be indexed for inflation.
As a result, all future Social Security beneficiaries will see their benefits grow by an amount at least equal to inflation over time. The reform will not affect the cost-of-living adjustment that Social Security beneficiaries receive each year once they have begun receiving benefits. The use of progressive price indexing will peg the growth of future Social Security outlays to a realistic index of the cost of living, while rescuing the program from the insolvency that will otherwise occur. It will place the program on a sustainable fiscal and economic course.
Modernizing the Retirement Age. When Social Security was enacted, the average life expectancy for men in America was 60 years; for women it was 64. Today, average life expectancy has increased to 75 years for men and 80 years for women (2007 figures). Life expectancies are expected to continue lengthening throughout the century. Given these facts, and the choice among many Americans to work additional years, this proposal extends the gradual increase in the retirement age, from 65 to 67, occurring under existing policies, and speeds it up by 1 year. Once the current-law retirement age reaches 67 in 2026, this proposal continues its progression in line with expected increases in life expectancy. This will have the effect of increasing the retirement age by 1 month every 2 years. The retirement age will gradually increase until it reaches 70 in the next century.
The modernization of the retirement age will not affect the ability of an individual who chooses the personal account system to retire early, as long as his or her account has accumulated enough funds to provide an annuity equivalent to 150 percent of poverty.
OBVIOUS BIAS, UNKIND, AND UNREASONED REMARKS
These remarks unfortunately show a lack of comprehensive understanding. It would appear that many people are not reading or studying, a bit like in Pelosi's comment about going ahead and voting for the health care bill and not bothering to read it first.
"Obviously [a common phrase used where someone doesn't use any facts] the Republicans [them bad, evil people] are just trying to steer the money to their buddies [assumption, unproven] on Wall Street, the Fat Cats [labeling, attributing evil, assumptive statement]." It would appear that he needs a class in logical thinking and fact-based decision-making.
He also talks about how all of social security is privatized, as if we are losing our options to not invest - and even if we invest we can only invest a maximum of 41% of our yearly contributions. Factcheck.org would have a field day with this fellow!
Bernie Sanders is one of our representatives that could use the Education Of Representatives program. His great quote, showing lack of knowledge and a few other lacks:
"In the last 75 years, in good times and in bad times, Social Security has paid out every nickel owed to every eligible beneficiary at a relatively modest administrative cost," said Sen. Bernie Sanders, who organized the first meeting of the Senate Social Security caucus Thursday.
"We are getting very tired about hearing our Republican and right wing friends telling us about how Social Security is collapsing when the reality is, Social Security today has a surplus of $2.6 trillion," Sanders said. "Social Security can pay out every benefit owed to every eligible American, for the next 27 years."
[Comments from the article in which he was quoted: Social Security has built up a $2.5 trillion surplus since the retirement program was last overhauled in the 1980s. Benefits will be safe until that money runs out. That is projected to happen in 2037 -- unless Congress acts in the meantime. At that point, Social Security would collect enough in payroll taxes to pay out about 78 percent of benefits, according to the Social Security Administration.
The $2.5 trillion surplus, however, has been borrowed over the years by the federal government and spent on other programs. In return, the Treasury Department has issued bonds to Social Security, guaranteeing repayment with interest.]
Sen. Chuck Schumer, D-N.Y., accused congressional Republicans of wanting to end Social Security by privatizing it.
"strengthens the retirement safety net by providing workers with the voluntary option of investing a portion of their FICA payroll taxes into personal savings accounts." What is it about the word "voluntary" does Schumer and others fail to understand. Voluntary = choice. It doesn't equal end.)
