The lefties won’t be pleased. The October 15 CBS “Evening News” and ABC “World News Tonight with Charles Gibson” had a different take on Social Security contrary to liberal Democratic presidential hopeful Hillary Clinton’s position.
On October 11, Clinton told CNBC’s John Harwood she wasn’t going to jump the gun and scare people by addressing their Social Security concerns. “I think what I owe the American people is to tell them I will not spook them and sound the alarm over Social Security because that’s not merited,” Clinton said. “We have time to deal with this problem. I will deal with it in a responsible fashion.”
But, ABC correspondent David Wright reported data that would make you think otherwise.
“In 10 years time, Social Security will be paying out more in benefits than it takes in taxes and about the time the last of the baby boomers retires, the system will go bankrupt,” Wright said.
Perhaps it was Clinton’s sentimentalism for historic figures. As Wright pointed out, Franklin Delano Roosevelt lacked foresight when he signed Social Security into law in 1935.
“Franklin Roosevelt did not foresee how a population boom might affect the program he created,” Wright said. “At the end of World War II, there were 44 workers paying Social Security taxes for every retiree collecting from the program. Now the ratio is just three to one and soon, there will be more retirees than workers.”
But, this wasn’t just an anomaly.
CBS Capitol Hill correspondent Chip Reid reported statistics differing from Clinton’s Social Security premise also. “[A] staggering 77 million baby boomers will begin cashing in on Social Security over the next 20 years, leaving it with a long-term shortfall of about $15 trillion – $50,000 for every man, woman and child in America today,” Reid said.
Both networks also cited conservative experts – Michael Tanner from The Cato Institute and David John from The Heritage Foundation – who pointed out the looming fiscal problems involving Social Security.
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Stern Lecture
October 16, 2007 - 17:20 ET by allanfDo you see a stern lecture coming on. Charlie, David and John should not cross the boss.
Who spooked who???? (OK, whom.)
October 16, 2007 - 22:54 ET by motherbeltI will not spook them and sound the alarm over Social Security because that’s not merited,” - Senator Clinton
GOP.com has a listing of quotes from the (other) Clinton years regarding Social Security. The words "crisis" and "critical" figure prominently. What has happened in the meantime, Mrs. C, that has "fixed" this "crisis"? Or, was your husband just blowing smoke and unnecessarily creating a panic, for political purposes?
SS
October 16, 2007 - 17:31 ET by doug1950The Social Security Program today does not even remotely resemble what was originally put into place. The same people who created our Tax Codes and manage the Social Security Trust Fund have dittled with it for decades until it is just another Government program run amok. The train is running out of track and they are thinking of decorating the station.
Not So Fast
October 16, 2007 - 17:37 ET by NoMoreClintonsI will deal with it in a responsible fashion
Not gonna happen . . . we'll be celebrating President Giuliani's victory next November while this corrupt b!tch crawls back under her rock.
leaving it with a long-term
October 16, 2007 - 18:02 ET by dscottleaving it with a long-term shortfall of about $15 trillion – $50,000 for every man, woman and child in America today
Hmmm, isn't that an amazing contrast to the $2.5 trillion in 401k's assets?? How is it that the public saving money and investing around 25 years it in the market have managed to have a positive balance for future use and the government on the other hand have a deficit instead. That's what you get when you let politicians walk off with everyone's money, spend it and leave an IOU for a future generation to pay back. Only incompetent idiots behave this way!!! So much for the most successful Socialistic program in history. And here Hillary proclaims there is no problem, I'm not going to say anything about it and hence I have no intention of showing leadership on something that really matters.
Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity
Social Security
October 16, 2007 - 19:08 ET by YaegerMeisterFrom what I have seen, the Social Security Program can be easily fixed by extending tax beyond it current limits ~$97K. Congress is foolish to not extend it and also own up to the fact that this should be a middle and lower class welfare program funded by the folks making the most money.
Surely Pelosi and Reid can fix this problem this year and claim they accomplished something?
Sure, in fact why have an
October 16, 2007 - 20:18 ET by motherbeltSure, in fact why have an upper limit at all? Just take a portion of every dollar of everyone's salary, no matter how high. And then forbid anyone who earns over $100,000 from ever collecting SS, since it's supposed to be for the "middle and lower class".
<sarc off>
BTW, what do you consider "middle and lower class"? Do you consider $97,000 a year "wealthy"?
Actually, that would only be
October 16, 2007 - 20:27 ET by dscottActually, that would only be a partial fix to stave off the day of bankruptcy in 2042 by only a few years and that's the easy one. If it was that easy, it would have been done years ago.
If you take a tax hike out of the equation, the only sound fiscal management is to invest the money like every other pension fund does, in the market.
Why is a tax hike not acceptable? Because the same people who put us in this situation in the first place by spending on vote buying schemes using the SS tax receipts leaving the IOUs (Bonds) are the very ones who we can not trust to collect any more funds because they will only spend it on some other useless program they foolishly call investments.
Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity
Lest we forget: There is
October 16, 2007 - 20:37 ET by jdhawkLest we forget:
There is no "Social Security Trust Fund." The money that is taken out of your and my paychecks goes into the federal general fund. And, it is spent for any and all government obligations.
Be that as it may, social security and medicare take 15.3% of every dollar you make before you see a dime of the money. This is an outrageous sum. Especially if you add it up over a lifetime.
Think if you could have that money at the start of your working life, instead of the government, to invest. What a tremendous nest egg you would have upon retirement. Now, you have to worry if there will be anything there at all.
Now, remember fondly, President Bush's bill to take just a smidgen of that money and give it back to you.
Fast forward to reality: if the dimocrats keep their power in congress and win the presidency, there will be only one solution - the same solution that has "worked" the last time a dimocrat congress and president were in power - raise the tax and simulaneously raise the age to receive full benefits. Additionally, lift the limit on the tax - it is presently the first $97,500 of wages.
Vote Republican in '08!
jd
October 16, 2007 - 20:50 ET by botgI am 51, at this point i would gladly relinquish any claim to collecting one penny of Social Security IF I would not have to pay any more into the system. Let them keep every penny I've paid ang let ME invest 15% of my salary until I retire. Trust me I'd come out way ahead.
"Television is where you watch people in your living room that you would not want near your house." Groucho
That's not far from the
October 16, 2007 - 21:23 ET by dscottThat's not far from the truth. If you retired at age 65, invested all the proceeds in the S&P or Dow index fund plus carried a decreasing term life insurance policy to retirement to make up the difference if you have a spouse. You just might make it figuring an annual 10 to 12% historic market returns over the 14 year period. The draw back of this approach is you get hammered with taxes on dividends every year until you retire.
The alternative is take that 15% of your salary, invest it in a Variable universal life policy that allows you to invest in the market via a S&P index mutual funds within the policy and then draw down on the cash value at age 65. You will pay no annual tax until you being withdrawing, and then only on the actual gain assuming you just paid income tax on the money you put in (I would declare FIFO personally). The portion you paid for the life insurance component of the premium would be less than the annual income tax and this premium ends at age 65 anyway. In effect, you would have created your own personal 401k without the limits imposed by the government, for those who are self employed this is a good way to get around the government restrictions and pilfering.
I suggest running an excel spreadsheet using your salary and basic assumptions.
Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity
RMR A juicy bone
October 16, 2007 - 23:50 ET by RMRRMR
A juicy bone tossed to conservatives from not one, but two main pillars of the drive-by media?
Can you imagine how many hate America, hate the millitary and George Bush is evil segments they will have to air to make up for this colossal blunder?
Moveon.Org, Media Matters and the other lefty kooks will demand nothing less.
I don't know about you guys but I am heading for the bunker.
The blow-back on this one will be fierce.
Take Investment advise carefully
October 17, 2007 - 08:10 ET by mbrewer1While I agree with being able to invest the 15% of your salary that the government "liberates" from your check every week on your own, it always pays to seek the advise of a professional in the financial world before starting a retirement investment program (and, no, I am not a financial professional, so I have no bias in this recommendation).
For example, marketing a Variable Universal Life Insurance Policy as an investment vehicle is ILLEGAL according to the SEC (if you don't believe me, look it up). Life insurance is just that....insurance, not an investment. If you want to give life insurance companies your money, talk to them about an annuity. For some people, that makes sense. For others, a tax deferred IRA account is better, while for others still, the ROTH accounts make the most sense. There are numerous strategies and funds out there....seek advice from somebody you can trust (which is easier said than done...I realize that) up front. It's worth it in the end!
You are technically right
October 17, 2007 - 09:20 ET by dscottYou are technically right on all counts, however, being a shrewd investor one looks at all the options available regardless of who does the selling or pretense. The annuity (variable type) is an alternative to the Variable Universal if you don't have anyone to take care of when you are gone from the world. Both allow self directed investments (using after tax dollars) of the cash value in market based mutual funds on a tax deferred basis similar to the 401k or IRA without the annual funding limits.
Most people do have another person to be responsible for even with they are dead so the life insurance component is important for many. The bottom line is it is your responsibility to think ahead, plan for the future to take care of yourself and your loved ones. I will go so far as to say that if you don't have some form of life insurance (either term or universal whole life) to take care of your loved ones in the unfortunate event you die an untimely death you are not being responsible.
Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity
If you want to maximize
October 17, 2007 - 09:43 ET by fosstenIf you want to maximize your dollars, do NOT combine life insurance and investments in the same product. Buy term life insurance, which is cheaper per thousand, and buy your investments separately. If you've already combined your vehicles, it may be to your benefit to revisit this.
Those who would sell you any form of universal or whole life insurance would fail to tell you of the negative consequences of doing so; namely, you will never see both the cash value and the death benefit. You will get either one or the other. And if you take out the cash value while you're still alive, you have to pay it back. With interest. That's right: it's a loan; it doesn't really belong to you.
With separate vehicles, you can have both for less cost and higher return. This is indisputable and there is case law backing it up.
Forget 911, I dial 9MM.
And if you take out the
October 17, 2007 - 10:04 ET by dscottAnd if you take out the cash value while you're still alive, you have to pay it back. With interest. That's right: it's a loan; it doesn't really belong to you.
Again, technically true, however, at age 65 you can cash out or convert any whole life policy and then re-invest it in an annuity which then pays out either over your remaining lifetime or a time period you select all of which is tax deferred.
To my knowledge there is no pat rule of thumb that says the premiums you pay on a whole life policy minus the cash value at age 65 is going to be more than if you just had a term life policy. Yes, in the short run on an annual basis, the premium of a whole life policy is more than a term policy, however, at the end you have a substancial cash value with whole life whereas with term you have zero at age 65. Every person's situation is unique depending on age and the amount of insurance which requires you to have both quoted to determine which is the better route. Also, it does not necessarily hold for Variable Universal Life Insurance policies since what you get back from the cash value from investing over the guaranteed rate of return is tax deferred. In other words you prevented the government from pilfering your annual dividends via the annual income tax thus allowing more working capital to invest over the period.
Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity
Again, you're telling half
October 18, 2007 - 07:53 ET by fosstenAgain, you're telling half the story. If you die before age 65, the insurance company KEEPS the entire cash value. You get zippo; zilch. And if you cash out the policy and then die, you get only the cash value, which is worth much less than you paid for the entire policy. But if you have a separate life policy and investment portfolio, not only does your family get the life insurance benefit, but voila! they get to keep the investment money as well. The "guaranteed rate of return" of whole life policies is substantially less than the overall rate of return of the mutual fund market for the last 20 years.
There may be no pat rule of thumb on premiums as you say, but I've examined hundreds of whole life policies and have yet to see one that actually costs less per thousand than a term policy, all other factors such as age and health being equal.
And investing with a traditional IRA is tax deferred as well. A Roth IRA is even better. "Investments over the guaranteed rate of return" (which is very low, usually less than 5%) are nothing but overpayments to the insurance company which the company NEVER pays you back unless you surrender the policy or unless you BORROW YOUR OWN MONEY and pay it back with interest. See my first paragraph above for why, again, using separate vehicles is the best way to go.
Yes, everything I said is "technically" true. And when it comes to interpreting the language of a life policy, you all better believe that the insurance company will ALWAYS adhere to the "technical" language.
Forget 911, I dial 9MM.
Again, you're telling half
October 18, 2007 - 10:53 ET by dscottAgain, you're telling half the story. If you die before age 65, the insurance company KEEPS the entire cash value. You get zippo; zilch.
Ummm, fossten, I think you need to revisit that answer. The point of life insurance is when you die, the people who are the beneficiaries get the full amount of what is on the face value of the policy, e.g. if the policy is for $500,000 and the cash value is say $200,000 if you die before 65 your beneficiaries get $500,000, that's the risk element reflected in all insurance premiums. The premiums are set to accumulate to the face value of the policy of age 65. On a Variable Universal policy your beneficiaries get the "greater" of the two (cash value versus face value) if you die before 65.
The insurance company does not keep anything, you are thinking of a "life" annuity where the insurance company guarantees a fixed payment for the life of the person, payments stop when you die and the insurance company keeps the rest. You have a choice of annuities, either a fixed amount for life (no beneficiary) or a defined amount over a fixed period (beneficiary if you die before the fixed period). In a life annuity, the insurance company makes the gamble that you will die before age 95 thus is willing to make a higher monthly payout as opposed to a fixed term annuity where no gamble is made.
I use the term gamble as insurance companies use actuarial tables to determine your life expectancy and calculate payments accordingly. At this time life insurance companies are writing policies based on age 95 life expectancy. So when you as a say 30 year old take a life insurance policy the premium is based on your chances of reaching age 65 in view of the 95 life expectancy. As far as the life insurance company is concerned your chances as a 30 year old are good to reach 65 with the caveat that you don't smoke, take drugs, mountain climb, pilot small planes or scuba dive, etc. You do any of those risky behaviors, they either jack up the premium to reflect your risk or just not write the policy. You on the other hand are gambling that you may not make 65 and thus you are willing to pay a premium to make sure your loved ones will be financially taken care of by the face value amount you decide in the event of your demise.
All life insurance policies by definition must have a beneficiary and an amount to pay out to that beneficiary, that's the Law.
Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity
Umm...dscott you need to go
October 18, 2007 - 12:17 ET by fosstenUmm...dscott you need to go back and re-read what I said. I never mentioned life annuities. Stop throwing straw men at me.
Once again you leave out a very important part. A whole life insurance policy has a cash value and a face amount. If you die, you get the face amount only, MINUS any cash value you have borrowed (including interest you owe). You do NOT see the cash value, the insurance company keeps that. If you live and cash out the policy, you get the cash value. Under no circumstances do you ever get both. There was nothing incorrect in what I said.
I understand how life insurance works. I replaced hundreds of whole life policies with term for several years. I also understand how life insurance is sold - people are told that the cash value is an "investment," case law be damned. They are led to believe that they get the cash value and the death benefit.
I really doubt anybody else is still reading these comments. Do you really want to continue butting heads over this?
Forget 911, I dial 9MM.
You were illuding to
October 18, 2007 - 12:58 ET by dscottYou were illuding to annuities (also term life) when claiming you get zip at age 65, not so with whole (universal) Life insurance policies. At age 65, the cash value is equal to the face value. No strawman argument there. That's what the premium is based upon. You seem not to be understanding what I am saying.
They are led to believe that they get the cash value and the death benefit.
I did not claim you get both cash and face value, you didn't read what I said. If an agent is misleading people in that manner, that's unethical. It's either one or the other, face value if you die or cash value if and when you end the policy. The idea of the insurance company keeping the cash value at payout is nonsense, if you die they are giving your beneficiary the face value which is more than the cash value, in essence they are paying your beneficiary all the cash value plus the amount up to the face value. The face value is always larger than the cash value before age 65. If you cash out before age 65 you get the cash value, not the face value.
Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity