[seanmcdirmid]

Most of US debt is owed to US people's. Primarily, social security. Are we just going to be screwed in retirement?

China holds a small part of the debt, in treasuring bonds that they can roll over or not into new T-bills. It is more about keeping dollars from heating up their market than a need to lend money. They can simply stop doing that if the Americans decide they don't want to honor T-bills anymore, but I'm not sure what that gets us?

[gymbeaux]

Social Security was a great idea in post-depression times. I don’t think it would ever pass today- one, because so many Americans lack empathy(1) and two, because there are better systems that have been proven to work over time in countries like Sweden. The problem, as is so often the case these days, is that Republicans run their excellent propaganda machine to try to strike down social security retirement, Medicare/medicaid and food stamps without a replacement. “We don’t need a replacement!” Democrats, playing their part, are asleep at the wheel, and instead of proposing a revamp of the system to align with modern socialism (eg UBI), they simply want to kick the can down the road and keep everything as it is.

(1) https://jspp.psychopen.eu/index.php/jspp/article/view/5209/5...

[seanmcdirmid]

SS is easy to fix by just lifting the income cap on it and making it more progressive. But Republicans aren't going to do that, I guess.

Even today if you retire on SS alone, that's basically welfare that you paid for, it isn't really enough to live but might prevent you from starving to death. Thankfully, our life expectancies aren't rising so fast anymore (and actually falling a bit), or we would have a huge problem (forgive the dark humor).

[giantg2]

"SS is easy to fix by just lifting the income cap on it and making it more progressive."

That's kind of a loaded statement. Just eliminating the cap can strengthen the system, but won't fully fix it. We could fix any deficit by increasing taxes enough (eg making it more progressive). I would potentially support removing the cap, but I would want to see changes around capital gains taxation before making the tax more progressive. I think most of the deficit fixes should be through actual tax architecture changes (capital gains, AMT/deduction, etc) vs just increasing rates or adding higher brackets.

"it isn't really enough to live but might prevent you from starving to death."

I believe the benefits have decreased in real value over time. However, it was originally intended to prevent people (mostly widows, children, and elderly) from starving. It wasn't designed to be a sole retirement program - people were expected to save or buy bonds. This is a similar type of thing for other retirement topics - like the 401k was originally meant to be supplimental. Most people in the US are extremely poorly prepared for retirement for a variety of reasons.

[gymbeaux]

I max out my 401k each year and would give my left nut to be able to opt out of SS. I know for a fact I will have that money in retirement if I’m allowed to keep it and stash it away, but will the welfare slush fund even exist by 2050- or will my years of paying into SS only hurt me? I realize it’s kind of a meme to say “SS won’t exist by the time I retire” but I think it’s fair to worry when politicians at the federal level have recently tried to nerf it (eg raising retirement age). I have no doubt in my mind that Republicans would eliminate SS entirely if they thought they could get away with it.

[giantg2]

What makes Swedish pensions a better system?

[gymbeaux]

They have three tiers of pensions- the government pension, the employer/union pension, and the private pension. The government (“public”) pension is the primary one that everyone gets, whereas the US counterpart (SS) is more “break glass in case of emergency” (by design, anyway). ChatGPT estimates if this system were in the U.S., I’d be getting around $7,000/month as a retiree, from the public and employer pensions. Private is essentially our 401k/IRA system so it could be 0, or could be substantial. Social Security pays about half that best-case, and that’s before we factor in the private pension. I like that one’s retirement is funded by both the government and the employer, and optionally by the individual. It’s clear that Americans cannot be trusted to set aside money for retirement.

I also like that Sweden looks at the highest 15 years of employment income, while US Social Security looks at the highest 35 years. I won’t have 35 years of employment if I retire at 59 1/2 (which I guess is a pipe dream anyway) so there will be 0’s for purposes of calculating average annual income, hurting my monthly SS benefit amount.

[giantg2]

I'm not sure I'd trust the ChatGPT number unless it shows its work. Is that inflation adjusted for your retirment age, adjusted for COL, including only the public pension or other parts, and what ages is it using?

An easy point of comparison is what the maximum benefit equates to in percentage of average gross income for the individual and what the taxes are for it. We see about 12% SS tax in the US and about 18% mandatory pension tax in Sweden (not counting the semi-mandatory). Benefit-wise we see earners at the ceiling getting about 30% in the US and about 20% from the mandatory portion in Sweden. Retirment ages are similar but about a couple years later for the US. Both systems have minimum retirement ages, survivor benefits, ceilings, and non-progressive fixed rates. I wasn't able to find any mention of the 15 year calculation. Also, the 59 1/2 retirment age you mentioned is not an option under SS nor Sweden's mandatory systems.

So yeah, it seems like the mandatory portion pays out less than SS, but might require fewer years of pay.

I'm not sure what criteria that we are using to determine if it's better as they seem very similar. If you want to work fewer years and get a smaller payout, that's possible under SS as well. If we want to include employer contributions as well, we would have to look at things like union employees, public sector employees, and employer contributions to DC plans in the US.

"I like that one’s retirement is funded by both the government and the employer, and optionally by the individual."

This isn't true. Participation by the individual is mandatory in either system. The only thing the government is covering under Sweden is in the event of childcare.