Dean Baker Schools Simpson on Social Security
by Bruce Webb
Dean asks:
1) How much higher are real wages projected to be in 2040 than today? In other words, how much richer do we expect the average worker to be 30 years from now?
2) How did the 2010 Trustees Report change the projections for 2040 wages compared with the 2009 report?
3) If we solve the projected shortfall in Social Security entirely by raising the payroll tax, what percent of the gain in real wages over the next 30 years would have to go to pay the tax?
4) What percent of real wage gains over the last 30 years was absorbed by the increase in Social Security payroll taxes?
5) What percent of the projected long-term budget shortfall is due to the inefficiencies of the US health care system?
6) How much wealth should we expect near retirees to have to support themselves in retirement?
7) What percent of older workers have jobs in which they can reasonably be expected to work at into their late 60s?
Dean Baker takes Al to school. And then to the woodshed out back.
Senator Simpson’s Quick Budget Quiz
ah Arne
as an ex-speller, all i can say is that if your brain ages the way mine has you will come to understand that spelling is not very important. but there does seem to be some kind of anti-spelling aura about the internet.
i think the fity percent of old people rely on SS formore than 50% of their income. and 40% rely on SS for 80% of their income are official statistics, not just survey results. but Andrew Biggs has done a careful study which shows that less than 13% rely on SS for all of their income, if you count food stamps as income.
his feelings were hurt when i called him a liar. it’s not that his fact was wrong, but the reason he published the fact.
beans and rice are fine with a little cheese.
What a depressing list of comments for this old man to read. I live on my SS & support 3 people. I don’t own anything, but collecting bottles & cans, does give my thirst of belonging to a group, a drink. Which leads me to ask the question I have asked before, but no one seems to want to answer; Just what can be done to stop this madness, or do we all, who drink from that famous tit, (no insult to the cow) just roll over & die?
As each day passes, I watch helplessly, the degradation of the Country that I & my family, all the way back to the rabble rousers that the King threw out of England, have defended, so that it can end up like this? Has that same spirit been lost? Are we seeing the last of America the home of the brave, the free, the greatest melting pot the world has ever known? This is a sad moment for me, as I have 3 great grand children who will inherit this mess, but nobody seems to care other than to voice an opinion. I suppose no one will answer these questions here, as some think I’m just a blithering idiot for asking!
Coberly & Nancy–I am on your side. I posted my retirement funding ormula as an attempt to respond to Dean Baker’s point #6 and to try to show how frightfully expensive it would be to have to fund your own retirement out of personal saving.
JP Morgan is said to have responded to a friend’s question about how much it cost to own a yacht by answering “If you have to ask, you can’t afford it.” Self-funding of retirement is much the same.
To be more specific, if a couple just turning 65 retires (and just gets by) on Social Security of $15,000/year, my formula suggests that their SS benefits would have a “replacement cost” of something in the range of $450,000. That, of course, is a sum they could not have dreamed of accumulating as personal savings. To me that shows, albeit indirectly, how urgent it is to maintain Social Security, and to expand if politically possible
Norman,
Let’s do something!
Sign up to this and stop the military madness part:
http://capwiz.com/fconl/issues/alert/?alertid=15852531
Barney Frank (D-Ma) and Ron Paul (R-Tx) see a clear and large amount of funding in the war machnie to fix things like the deficit.
Go sign up to include excess war spending in the deficit commission.
Norman
hardly blithering.
but you are in the same boat as the rest of us. HOW to you get them to stop? Talk to your neighbors. They are all conviced that “freedom” means they don’t have to pay taxes. And the big corporation doesn’t have to tell you what it puts into your drinking water.
But Nancy and Norman
Peterson will show you, in terms even a child could understand, how you, yes YOU, can retire a millionaire, simply by putting your Social Security taxes into a sure thing on Wall Street. It’s a plan that never fails.
I’d play that vinyl recording backwards at this point.
You had 12.4% of lifetime income sent to SS. That’s $124,000 per every $1,000,000 of lifetime income.
If we ignore investment return on that and inflation, in today’s dollars that would come to $124,000 per every $1,000,000 of lifetime income.
So what you need to get to Ground Zero before accumulating retirement savings would come to $124,000 per every $1,000,000 of lifetime income.
Bruce,
Not saying to close your eyes. Just want to make sure we all know where the blame falls.
Specifcally this is Democrat President Obama’s baby. No one else.
Islam will change
Dale–I’d much rather he just give me the million bucks. It’s chump change to him and an absolutely sure thing for me! But, no! He wants us to just hand over the Trust Fund to him and he’ll take care of the details. Well, I like my idea just as much as he likes his. And, I don’t like his at all. No sale, Pete. Nancy O.
Y’all–Jane Austen, always astute, has this to add to our conversation:
“Nothing amuses me more than the easy manner with which everybody settles the abundance of those who have a great deal less than themselves.” –Jane Austen
Like I have credibility here anyway….why would that matter anymore?