[PaulDavisThe1st]

This was known from the beginning.

I'm not a fan of the PR that surrounded the introduction of SS in the USA, but the technical aspects of how it was intended to work have not changed, and have worked as intended thus far. Fixing the demographic issues is relatively easy: just remove or increase the cutoff for SS taxes.

[scarface_74]

So it’s easy, just give the government more of your money instead of controlling it yourself?

You know if you increase the amount of income that is eligible for social security that means you also increase the benefit amounts.

How is paying more taxes that the government can use for whatever it wants better than saving your own money?

[ryandrake]

I don't understand why "you control your investment" is such a selling point. If I put $X in and get $Y out, I don't care whether I "control" it or not. Does the ability to choose between dumping your money into Fund A that pays 7% with 0.1% fee or Fund B that pays 7.1% with a 0.2% fee really make you feel like you're empowered?

All other things being equal, I'd rather not have to control it. One less web site to have to log into to micromanage something that should just be done for me. Let a index fund manager or the government get me my 7%. I really don't care at all.

I guess some people just hate on principle the idea of government doing anything for them, so for them, owning the account gives them a warm fuzzy feeling. I don't get it.

[scarface_74]

Where is the money going to come from for you to get $y? In 20 years, the government is already going to have to raise taxes to meet then current obligations. How much more do you think they are going to have to raise taxes to meet increase obligations.

[ryandrake]

> Where is the money going to come from for you to get $y?

I. Dont. Care.

Maybe some government retirement agent can pick the index fund. They should feel free to knock themselves out geeking out over it. They'd probably just contract it out to Vanguard or whatever. Great and fine. I don't want to do it.

Our insistence on privatizing and individualizing everything just makes more busywork for everyone. I have an HDHP and HSA and it's frankly awful having to log in all the time and look for claims and pay the doctors from it and all that on top of the Explanation of Benefits form that comes from the insurance company and the separate bills from each doctor and me in the middle having to tell customer support from hospital X to talk to insurance provider Y over line item Z arrrrggggghhhhhhhh! I just want to go to the doctor!

Somehow voters keep optimizing for the geeks. Yes, there are a handful of people out there who enjoy spending their valuable time hunched over a spreadsheet looking at investment funds. They get their way with these hyper-individual 401(k) accounts. Screw the rest of us who just want to live their lives and then retire.

[scarface_74]

So you can’t invest the time in your own financial future by going on a website. But you can invest the time to spend 10 years on HN and get almost 40K in karma?

[ryandrake]

I definitely don't find my Vanguard account as entertaining as my HN account. I do it because the brain trust that came up with the idea of a 401(k) says I have to in order to retire.

[PaulDavisThe1st]

> Where is the money going to come from for you to get $y ?

Where does it come from in a 401k plan? The obvious answer is "growth in asset values", but what does that mean? It means you took ownership of something that is worth more at the time of sale than at the time of purchase. That's an investment (aka "gambling") strategy and it MUST come with a disclaimer that returns are not guaranteed.

By contrast, socialized pension systems (of which SS is an example, albeit not a particular awesome one) are NOT investment strategies. Their goal is to provide a guaranteed income for people in retirement. It follows that they must be designed and work quite differently. One part of the strategy was termed "pay as you go", in which current workers pay for the outlays of current retirees. There's nothing inherently wrong with this approach, but as you note it can run into demographic bubbles. However, the idea that handling the one we are in/facing right now needs some sort of massive tax cut is false: just remove the cap on income subject to SS taxes, and there is no issue.

Corporate pension plans were/are a strange middle ground. Behind the scenes the fund manager would be following an investment strategy, but as far as the employee was concerned, the plan offers a guaranteed return. This was supposed to be able to work because the corporate pension plan offered a modest guaranteed return and behind the scenes, a more volatile but hopefully more substantial value was associated with the fund. This would, in theory, allow the company to make the payouts that formed part of the contracts it had agreed to with employees, but way too many companies failed to even manage that. And of course, it turned out that many had dipped into "their" pension funds to provide general corporate revenue or, even more brazenly, had simply not paid in the contributions they were contractually obliged to (I am not aware of a single company that has ever been sanctioned for this insanely illegal behavior).

[scarface_74]

The social security tax id capped. But so are the benefits amount. If you increase one, you have to increase the other.

Also, with my 401k plan, the amount I accumulate can be inherited when I die. I could also take some of it as a lump sum at retirement to pay off my house (hypothetically, mine will be paid off when I’m 60).

[frumper]

> If you increase one, you have to increase the other.

Why would you assume that? Social security has been changed since it's inception, it's not written in stone. Changing the cap would be a relatively minor change compared to any changes needed if nothing is done.

[PaulDavisThe1st]

The 401k plan is basically just permission to defer taxes on your own personal investment strategy.

While that can work out as a viable retirement strategy for some people, it's not really the basis of a solid, dependable retirement system for a nation.

> The social security tax id capped. But so are the benefits amount. If you increase one, you have to increase the other.

I don't believe that the laws and regulations for SS require this.