<p>And all that takes is one serious illness. </p>
<p>From SmartMoney magazine:</p>
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</p>
<p>Notably, the authors guesstimate of longevity is too high. At age 62, males have a ~19 year life expectancy adn females ~22. Let’s call it an average of 20 for simplicity. At $1500/mo., the payout is $360,000, which exceeds your pay-in. But again, don’t forget that you had all of those “free” survivor and disability benefits while you were working those 40 years. Thus, you already have received non-cash benefits, which have a cost to somebody.</p>
<p>Quack-quack.</p>
<p>(I have no opinion on the VAT since it is not a realistic possibility, IMO.)</p>
<p>It’s really not productive to think of SS as a retirement plan, it isn’t. It’s an entitlement program where the benefit is loosely related to how much you earned. The benefit can be changed at any time, you have no vested interest or legal right to it, the money collected each year goes largely to paying that year’s benefits, the extra if there is any is spent. So to talk about “getting more back” or “time value of money” is meaningless, because it’s not a pension, there is no investment being made on your behalf.</p>
<p>
He hasn’t paid anywhere close to $300,000 in medicare premiums unless he makes millions of dollars per year.</p>
<p>What I’ve paid cumulatively over my life in medicare would probably pay less than two years of a health insurance plan bought on the open market.</p>
<p>The idea behind these programs was great, but they are out of control.</p>
<p>Which is greater:</p>
<p>a) the amount of money collected every year in Federal income tax; or
b) the amount of money collected every year in FICA tax?</p>
<p>I am amazed that people pay a couple of hundred thousand into a program…or more…and it is called an entitlement program…When they receive something back.</p>
<p>The issues you mention notrichrenogh…do not make SS an entitlement program.</p>
<p>It is amazing that if something is said enough…people believe it.</p>
<p>The 300,000 over 40 years … That is SS…not medicare…</p>
Why do you think that because one of the buckets you throw your tax dollars into has a label that says “retirement”, that means you are paying into a retirement program? </p>
<p>
Suppose your employer came to you and said, “we have a new pension plan. You pay money into it each year which we use to pay people who are currently retired. Then when you retire, you’ll get the money paid in by people still working. But who knows how much you’ll get, and it could be zero if the people still paying in decide to stop.”</p>
<p>You’re a money guy - would you invest money in this plan? Even with 100% employer matching?</p>
<p>People get confused…the government is not a company…</p>
<p>The US, with all the bs…is not a credit risk. You might get paid back in devalued dollars.</p>
<p>Who the hell knows which companies are going to be thriving in 40 years?</p>
<p>A majority of people use SS as a retirement program in the US.</p>
<p>I don’t really care if you want or don’t want to call it a retirement program.</p>
<p>But to call something an entitlement program…and using the word entitlement as if people don’t deserve it…after people pay into the program for up to 50 years…(although, only 35 count) is just BS.</p>
<p>I don’t care how many times people say entitlement…it is just bs…</p>
<p>Yeah…there will be some that get benefits and paid very little into the system…
People love to focus on the negative and not the positive.</p>
<p>Since I am a finance guy…I am telling you that SS’s shortcomings can be fixed. The problems are not that big.</p>
<p>The problems could be big…if we listen to the hacks.</p>
<p>For example…I can watch the Kudlow Report…and become brainwashed.</p>
<p>I happen to have it on right now. Luckily…the sound is on low…</p>
<p>Low-income people spend all of their income, generally speaking. Regardless of whether they consume this or that, they must still pay the sales tax. Every penny that comes in goes toward basic necessities. Middle- and upper-income folks can choose to save a chunk, and still keep a roof over their head and food on the table. Not so with lower-income people. That’s why any sales sales, including a VAT, is regressive.</p>
<p>The same holds for a flat income tax, BTW. The further down the income scale you go, the harder it hits.</p>
Only two ways to fix it - raise taxes or lower payouts.</p>
<p>Which one you are for?</p>
<p>Keep in mind that the $2.5 trillion “surplus” has to be paid back by current taxpayers or borrowed and kicked down the road to future taxpayers.</p>
Is that how you think pensions work? That over 100% of this year’s contributions are paid directly to retirees, and nothing is invested for the workers making the contributions?</p>
<p>“Since 1980, the share of the nations income for fat cats like me in the top 0.1 percent has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent. At the same time, effective tax rates on the superwealthy fell to 16.6 percent in 2007, from 42 percent at the peak of U.S. productivity in the early 1960s, and about 30 percent during the expansion of the 1990s. In my case, that means that this year, I paid an 11 percent rate on an eight-figure income.
One reason this policy is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we dont buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.”</p>
<p>“The 100 largest pension funds run by public U.S. companies had a record funding shortfall of $326.8 billion at the end of 2011, as sagging stock prices and low interest rates combined to lower investing returns
and increase liabilities, a report released on Thursday by pension consulting firm Milliman said.”</p>
<p>"Nothing like a surging stock market to boost the coffers of corporate pension plans. According to BNY Mellon Asset Management the funded status of the typical U.S. corporate pension plan stood at 76.2 percent at the end of February. This is the best funding level since August 2011, the bank and investment manager noted. The story is totally different, however, for multicompany plans. A new report issued by Credit Suisse Securities found the funding levels for these plans currently stands at a disturbing 52 percent. Most of the underfunding belongs to companies outside the S&P 500, with heavy concentration among construction, transports, supermarkets and mining, according to the investment bank, which pulled together data from 1,354 plans. “With multiemployer plans in bad shape, companies could get hit from a number of angles including, increased contributions, difficult labor negotiations, higher withdrawal liabilities … M&A could be impacted as acquirers have to price in the underfunding,” the firm warns in its report. “The new insights may even change investor and rating agency opinions of certain companies.” Credit Suisse elaborates that companies… "</p>
<p>I have a pension with Hewlett-Packard. They’re getting ready to lay off 25 to 30 thousand people. I get regular reports on the health of the pension plan and it looked like it was in decent shape in the last report. I just hope that they don’t have a lot of their own stock in the pension plan.</p>
<p>There were all kinds of pension abuses in the last decade which is why the PBGC is in trouble.</p>
<p>Now, on to the aforementioned debt that has the hairs on the back of your neck raised.<em>LT debt to capitalization has risen from 11.5% in 2008 to 36% on 2/22/12 and leverage has gradually risen from 2.1 in 2005 to the current 3.2. Further, HP’s pension is underfunded by an astounding $5B. [ASIDE: It’s worth noting that in its 2011 calculation of the annual net benefit cost (the annual pension charge), HP expected an annual return of 6.8% to 10.5% on its assets; since Warren Buffett is not the adviser overseeing the pension’s investments, a more realistic ROA assumption would be 4%, which would have docked operating earnings an addtional $750M pre-tax, or $0.30/sh after-tax (8% of EPS!). These unrealistic assumptions, which inflate EPS in any given year, can be quite telling of management; I’m curious to see if Whitman adjusts these awry estimates downward in 2012.]</em>On 2/29/12, the yield on HP’s 2021 bonds was 3.6%.*Contractual obligations at 10/31/11 were as follows:"</p>
<p>Part of the problem with the airlines is the availability of easy money to restructure so these companies can hang around forever creating competition which kills profitability. It may be great for consumers (not in all areas of course) but it’s awful as a shareholder or bondholder. And this stuff makes its way into pension funds.</p>
<p>Basically a lot of people agreeing to promises that they know can’t be kept.</p>