[lenerdenator]

It's happening in the US, too.

I know of a senior couple where the husband recently retired after forty years of working in a professional field. They live in a house worth over $750k that is paid off. They have three new or late-model vehicles. Both the husband and wife could, if necessary, work for an income.

They also collect Old Age, Survivors, and Disability Insurance checks after enrolling for them. The common name for this is Social Security.

Why the hell are they able to collect on that? They have the ability to work and assets that could readily be made liquid to fund living expenses.

[toast0]

They paid for Old Age Insurance, and they reached old age, so they get to collect.

Social Security as an insurance product is fiction, but playing into the fiction helps it survive to do the thing it was built for: keep the elderly out of the poor houses / off the street.

Payout rates drop at higher income, and portions of the payout are taxable at higher income, so it's not like it's completely income/wealth blind.

[lenerdenator]

> They paid for Old Age Insurance, and they reached old age, so they get to collect.

That's just it: they're not old. Not in the way a 65-year-old was old in the 1930s.

If they had to farm, mine, log, or work in a factory, yeah, they'd be too old to work. That was most of the work available when OASDI was created, and that's what it's for: to keep you from becoming destitute as an elderly person when there is no ability to work.

But they don't have to do those things. We're a service economy now and most of that involves sitting at a desk or very light office labor. They can still do that to sustain their lifestyle. Failing that, they could liquidate assets.

We're handing out money to people as a treat for their 65th b-day while the national debt is continuing to rise and their kids are crushed under loan debt, medical debt, and further revenue extraction to keep the shares backing retirement accounts increasing in value.

[greedo]

Bollocks. We complain because jobs are being occupied by the oldsters, and now you want them to stay in their jobs even longer?

If the couple you're pillorying is so wealthy, then most of their Social Security is being taxed, and they're paying higher Medicare premiums as well. And their house? As they get older and require nursing care, they'll end up liquidating it (or Medicaid will take it).

The average retiree receives around $25k per year in SS benefits. That's not a ton of money. In most studies, retirees receive less in benefits than if they had been able to invest their Social Security contributions. But that's fine, SS really has two main goals: a forced savings towards retirement, and as a social safety net for those who would otherwise be impoverished in old age.

[lenerdenator]

> Bollocks. We complain because jobs are being occupied by the oldsters, and now you want them to stay in their jobs even longer?

I'd just tax it at 100% unless they declare bankruptcy. The US national debt skyrocketed during their lifetimes. Mathematically speaking, they did not pay enough in tax to support the spending that their duly-elected officials enacted. They also didn't, mathematically speaking, have enough children to make up the difference in future taxpayers, either. The American birth rate never recovered after 1970. Someone's got to pay off those bills, and if the numbers comparing the Boomers to Millennials at the same age say anything, they say "the Millennials will not have the money to pay off their parents' government debt."

Is that harsh? I don't know. I do know that your children's generation is supposed to have it better than you, and by pretty much every objective measure, the Boomers did not do that for their children, at least not economically. So it's time for them to put up.

> If the couple you're pillorying is so wealthy, then most of their Social Security is being taxed, and they're paying higher Medicare premiums as well. And their house? As they get older and require nursing care, they'll end up liquidating it (or Medicaid will take it).

Why should they be receiving Social Security at all? Same with Medicare. This is the demographic that has more collected wealth than any other age cohort. If they do, in fact, need government help, they can prove their need, like you have to with unemployment insurance or Medicaid.

> The average retiree receives around $25k per year in SS benefits. That's not a ton of money.

Then those who don't really need it won't miss it. Those who do will have a more sustainable program to support them.

[triceratops]

So why did we make them pay Social Security taxes for the entirety of their 40-year careers? They could've invested the money at a better return than Treasury bills and had way more liquid assets.

[lenerdenator]

Why do you pay insurance for anything? So the funds are there if you need them.

The goal is not to maximize return, it's to guarantee a check that keeps you from being destitute. That's it. That's the whole point. Not limitless growth, not a nice bit of sugar from Uncle Sam every month to supplement millions of dollars in assets. To keep you from being dying in the street as an elderly person.

If we're going to call the current abuse of OASDI a legitimate use of insurance, then I want to be able to get my home protection policy company to help me out on a down payment for a house. I've paid in, after all. It's the least they can do.

[triceratops]

> If we're going to call the current abuse of OASDI a legitimate use of insurance

It's called "insurance" but it isn't really insurance like your home insurance. It's a mandatory pension plan. Everyone who pays into a pension is entitled to get it. It may well be a bad plan with a bad implementation. But those are the rules nonetheless.

If Social Security wasn't universal I guarantee voters would've gotten rid of it a long time ago. Then nobody would have it - neither the rich nor the poor.

[MrBuddyCasino]

They get much more out of it than they paid in. The younger cohorts get much less out of it than they paid in.

Thats not insurance, that’s generational fraud. It’s a ponzi scheme.

[greedo]

That's highly dependent upon the individual and their earning status, but the majority of people receive less than they contribute.

https://freefacts.org/resources/how-much-money-will-i-pay-in...

[hilariously]

Because they were promised it - fundamentally leaving the rich out of the social safety net doesn't even get us much and administrating the distinction costs money, and I am no fan of the wealthiest get additional benefits.

I think solving inequality will not be about reducing access to said safety nets but increasing them for all.

[lenerdenator]

> Because they were promised it

No, they weren't. They were promised a monthly check that, should they become absolutely devoid of marketable skills and liquid assets in their old age, would prevent them from dying in a gutter.

They're nowhere near dying in a gutter.

If you want to solve inequality, stop giving checks to people who spend it on golf trips to retirement villages in Arizona, and give it to people who have 84-month car notes and whose student loans are in forbearance. You only have enough money for one of those two groups, not both, so use utilitarianism to decide who to give it to.

[WalterBright]

The problem with "solving inequality" is there is no incentive for one to do better. If one can live as well as everyone else, with no effort, why should one make the effort?

[hilariously]

True, but I dont think any UBI scheme says "everyone live at the same level" more like "everyone gets enough to not die" which is a very different framing.

Work or die vs Work to gain additional benefits.

[WalterBright]

We already have welfare programs. Nobody is starving to death in the US.

[hilariously]

That's just incorrect.

https://www.usnews.com/news/health-news/articles/2023-04-13/...

Having been welfare adjacent more than once, getting food stamps is difficult and many legislatures have spent the last few years making it way more difficult, adding job requirements and the like. Ideologically you are probably fine with that, but it has consequences that you seemingly do not perceive.

[WalterBright]

The article is about old people having malnutrition due to poor eating habits and Covid disruption and the general ineptness of the government, and does not support your thesis.

[tekne]

Perhaps -- "the baseline is a decent life". Lots of people are willing to work really hard for perks and glory -- honestly, you can even take more risks if you're young and you know your life's not on the line

[WalterBright]

> the baseline is a decent life

The trouble with that is the same reason communism fails - too many people decide to just live off of the work of others, and play video games all day.

Also, who is going to work as a janitor? Most jobs are not filled with glory. They're tedious - that's why they are called "work".

[Terr_]

Kind of a strawman though, innit? If "civilization will stagnate and humans will be unmotivated blobs" is one extreme, then the other is something like "condoning economic genocide".

In reality, few are concerned that Alice has a much nicer car than Bob, compared to concerns that Bob will die without insulin. Get Bob his insulin, and he will still be motivated to have a nicer car.

[WalterBright]

> Kind of a strawman though, innit?

Not at all. It's the primary reason why communes fail.

[nixon_why69]

I think there's likely a steel man version of "solving inequality" that's a little less radical than "establish a commune".

Something like "arrest the trend towards upward accumulation which also reduces incentives to excel", maybe.

[WalterBright]

If we did that, we wouldn't have SpaceX, Nvidia, AI, etc.

[bruce511]

If you work for 40 years, chances are you will have accumulated some assets. I'm not sure that "sell your house and cars to pay for food" is a policy that will be popular.

Equally those same people have paid taxes for 40 years, paid into social security (to the benefit of their elders) and so on.

Keeping them in the work-force is largely undesirable. A job occupied by a 70 year old is a job not occupied by someone younger. If retirement age was say 80 instead of 60, there would be 25% fewer jobs to go around. (using imprecise simple math).

Look, most all of us will get old and eventually claim on social security or whatever. Politically just "ending that" is pretty much a non-starter to anyone who has been contributing for any length of time. Even fiddling with the edges of it (raising the retirement age) will get you voted out of office.

[opo]

>... If retirement age was say 80 instead of 60, there would be 25% fewer jobs to go around. (using imprecise simple math).

Economists refer to this idea as the lump of labour fallacy.

https://en.wikipedia.org/wiki/Lump_of_labour_fallacy

[bruce511]

If economists believe it, it must be true:).

More seriously though, it's not as simple as 25% fewer jobs, or an economy that grows 25%. For example the number of elected positions is pretty fixed, and all those octogenarians in the senate are certainly blocking younger talent.

Politics may be an extreme example, but lots of other jobs are "proportional". There's a fixed number of plumbing jobs (per million head of population) so adding 25% more plumbers dilutes the plumbing pool. A boon in construction would drive up the demand for plumbers, but construction booms come and go.

The "economy" is (again simplistically) a measure of money flow. It doesn't really measure "production" as much as it measures "cash velocity". As such having a retired tranche spending all day long is a good thing.

And yes, more labor would lead to a growing economy. But a lot of that growth is in "poor quality" jobs (aka service level jobs) not "new production".

In other words the economy "grows" if money changes hands quickly. The standard of living though is more tied to "production".

Take, for example, health care. The sector can grow 25% by adding more admin staff, claims evaluators etc. None of which results in better health outcomes. Or it can grow by building hospitals, training doctors and nurses. Both increase the economy, both offer more jobs, but only one leads to a higher standard of health.

In truth the current economy is built around the customers free time. From music, movies and tv, to sports, travel, phones, social media, online advertising and sales, deliveries (of goods or people), restaurants (fast or slow), home improvement, it's all about monetizing free time.

Having a large customer base with nothing but free time is what makes it all work.

[WalterBright]

> Keeping them in the work-force is largely undesirable.

That presumes there are a fixed number of jobs. Anyone can create a job, even doing simple things like going door to door and offering to mow the lawn.

[recursive-call]

Sure, in theory. But if that was economically viable, why isn’t anyone doing it?

[WalterBright]

People do it all the time. One man companies are commonplace. They come to my door now and then, selling magazine subscriptions, offering to clean my driveway, do yard work, tree trimming, exterminating, carry off junk, do estate sales for you, and so forth.

I remember one guy who had a one man outfit that replaced broken garage door springs. It was all he did. He had a trunk full of springs.

Any decent real estate agent has a rolodex of these people, who are hired to do what is necessary to prep a house for sale.

[Steve16384]

> If retirement age was say 80 instead of 60, there would be 25% fewer jobs to go around.

By that logic, when the population was 25% less than it is now (~1980s), there was a job for everyone.

[WalterBright]

> Why the hell are they able to collect on that?

People in the higher income brackets get far less back on SS than they paid in.

[Terr_]

I think it's important to emphasize that much of the in/out money asymmetry in SS is not rich versus poor ... but old versus dead.

Which, incidentally, is good and proper! OASDI is an insurance policy to cover an (alive) person faced with starvation or living in a ditch. That's a very different set of tradeoffs from an investment account that can pass to children who don't need it.

Like all insurance, it depends on a portion of people who pay in and then don't need it, even if sometimes that's because they've, er, passed beyond all material needs.

[lenerdenator]

Why should they get back any?

It's insurance. It's there in the name. Old Age, Survivors and Disability Insurance.

I get far less value back than I pay into my property insurance, unless, of course, I've had a fire or a disaster. That means I've presented a need for the insurance. A casualty has occurred. I have a claim. I can then access the value that I paid into the insurance fund.

I don't write the insurance company and upbraid them for not helping me out on the down payment for a house, because I understand the meaning of the word "insurance".

We essentially have a bunch of people writing exactly that letter.

[lenerdenator]

They shouldn't get any.

This is a fund for widows, orphans, and those who are simply unable to earn any sort of money to fund their survival. They're none of the above.

[WalterBright]

SS was set up as an annuity, not a charity.

[lenerdenator]

It was set up as neither.

It's a taxpayer-funded insurance policy, where the risk is you being alive without a way to earn a living. We have effectively managed that risk for a very large portion of the people who are collecting on that insurance policy by switching over to a service economy where most jobs do not require the physical labor that an elderly person cannot safely do. Furthermore, they're also the portion of the population with the longest time to have accumulated assets.

If you want to keep the insurance policy sustainable for the next generation - who is also paying into it - you need to treat it like an insurance policy. If you allow people to make any and all claims against the funds backing an insurance policy, the funds will eventually be depleted as there will be more people withdrawing from it than paying in. You also have to account for the opportunity cost of the people paying into that system not paying into something else, like our ballooning national debt, or the debts that many Americans of working age have to take on to maintain a decent standard of living.

[catgary]

Yeah, because they aren’t in need of a social safety net.

[bombcar]

Go to bogleheads and read for awhile - you get an amazing view into the “rich” in various stages and it’s eye-opening in a number of ways.

You find those who have saved so much they have no hope of spending it all and yet are still scared to spend. Those who spend months worrying if they can buy a new car to replace their 25 year old Camry and yet they live on social security alone while having mandatory IRA disbursements in the thousands.

Social security et al should never have been sold as “savings for the future” and just been another tax.

[nixon_why69]

SS has to pay everyone to be viable. If you make it more complicated the politics turn into a nightmare.

[adrianN]

Social security is already a redistribution scheme, it already is more complicated.

[throw-234]

> They have three new or late-model vehicles.

Depends on geography of course, but it's not rare at all for boomers to have this many houses as a normal part of how they experienced middle-class life. As a group they are not only more likely to have rental/investment property, but also more likely to have multiple such properties. Why would they sell? They can get you to pay for all their services, and vote as a block to deny and remove services elsewhere.

[lenerdenator]

Because that cannot continue in perpetuity. The cracks are already starting to show. If I were in my 60s faced with the real possibility of living another 15-30 years I'd want the younger people to feel like they had something to look forward to. Many young and middle-aged people in the US don't feel that way. What they can't get through the ballot box, they'll get other ways, ways that will cause others to say "I'm not saying I agree, I'm saying I understand."

It's the job of government to make sure that doesn't happen, not cater to it.

[underlipton]

They're not thinking that far ahead. Their response to the first waves of discontent - Occupy Wall Street, Trayvon Martin Protests, Michael Brown Protests, Charlottesville, Freddie Gray Protests, George Floyd Protests, January 6th - was either to mock or chide the aggrieved, or to cast them as unprecedented threats to the nation's security (but then not actually do anything to address grievances or even punish transgressions). So much stuff has burned in the past 1.5 decades, there's still not a wealth-adjusted plurality of Boomers who want to fix anything. Their tacit rallying cry came from Biden: "Nothing fundamentally will change."