There's some misunderstanding: I wasn't using a dollar-for-dollar ratio. The point regarding equality is that (assuming the earnings cap is removed) we'll all pay the same rate of taxation, and because of that, we should all receive the same benefits if/when we retire.
I understand. But the fact is, the system is at least partly need-based. There is already means testing involved, but only for work earnings.
Why is not considering investment income not "equitable" when we consider work earnings in determining eligibility to receive benefits?
And there are plenty other tax-financed programs that don't consider amount of contribution at all. And, as I've said, if we're making changes in the system--such as reducing total benefits paid out by pushing back the retirement age--there's no reason we can't also change it so that we don't send checks to people who have no need for them.
There are plenty of other tax-based social programs that don't consider contribution at all in apportioning spending.
However, SS was designed on the premise that benefits are for people in too poor of health to continue working. Holding onto stock for decades and drawing yearly dividends can be done by someone who is bedridden. However, if you are able to work then you should do that.
So wealthy people should be allowed to retire (and collect public money) at a younger age than poor people?
And I sure hope that's not the principle behind SS. We would all be working at greeters at Walmart into our 80s.
This goes back to the top - I wasn't implying a ratio between how much you paid vs. how much you get back individually. I mean that we all paid the same 3% in, and we all should draw the same 1K per mo. provided you aren't otherwise employed. This ensures all citizens have skin in the game, and ultimately serves to keep the program in existence. The wealthy count on SS as well when they manage their retirement.
Ah--my mistake. I thought you were defending something more like the status quo. Yes, I would prefer your idea over the status quo. At any rate, if we're going to make changes that are that dramatic, I don't see why we shouldn't also implement means testing. I see no reason to be obliged to give public money to people who don't need it. (And once you've paid your taxes, it most definitely is public money.)
And again, we have the luxury of a decent buffer from the Trust Fund that we can phase in any of these changes gradually so that no one's financial planning is severely messed up.
Informally...not so much. Many do view it as a contract, the entitlement attitude. I paid for it, I better damn-well get it.
And I think that's in part what Perry is playing on in calling it a Ponzi Scheme. The fact is, until recently nearly all benefits were paid out of taxes collected. It's only the changing demographics that are forcing us into chronically relying on cashing in Trust Fund investments to pay benefits. When we pay in our taxes, that money immediately goes out in benefits (unless there is a surplus). The money is not sitting somewhere in a reserved account awaiting
my retirement. That many people think that's how it works is what Perry is playing on.
You aren't however, cutting poor peoples paychecks. Rather, with an increase in the retirement age, you are forcing them to forgo retirement for at least 2 more years. This is entirely logical given our historical and projected increases in life expectancy and average retirement age.
I understand, but it is reducing benefits paid to everyone equally across the board. (Not in per month, but overall.) If we're going to make those changes (and I agree we ought raise the age for receiving full SS benefits), there's no reason we can't make other changes as well.
[ETA: There's also Lefty's point that the increase in life expectancy isn't actually uniform regardless of socio-economic-status.]
As a side note: I am not in favor of Perry's plan. While in a college business class a couple years ago, my then-teacher asked students to raise their hand if they thought SS would be around for them when they retired. Very few of us raised our hands. I honestly don't know of what significance that was as a story in the context of our discussion, but there it is.
I think I understand. If SS were voluntary, and the confidence young people have in its being there for their retirement is weak, they'd all opt out, and Social Security would disappear. That's why I say Perry's plan is not to fix Social Security, but to get rid of it.
I think that's also why he uses the "Ponzi Scheme" rhetoric. You don't fix a fraudulent system--you get rid of it as soon as possible.
