Economy

Why Don't Americans Save Their Money?

We must kill Social Security in order to save retirement.

|

One-third of Americans have nothing saved for retirement, according to a study published in August by the financial data aggregator Bankrate. That grim factoid joined a growing chorus of reports highlighting Americans' dismal savings habits. In 2013, the National Institute of Retirement Security (NIRS) determined that 84 percent of Americans are falling short of "reasonable" retirement savings targets. Data from the Center for Retirement Research at Boston College reflect a similar trend, and a recent PBS poll found that 92 percent of Americans believe we face a retirement crisis and that government should act now.

The reality is not quite as grim as these reports suggest. The American Enterprise Institute's Andrew Biggs took a hard look at the NIRS numbers and concluded that "the substance of the NIRS study should give pause to anyone considering drastic policy actions." One reason is that the study uses savings guidelines outlined in a 2012 Fidelity Investments report. But Fidelity suggests that people have enough money saved to enjoy 85 percent of their working income, while the Social Security Administration says most financial advisors recommend a lower 70 percent pre-retirement earnings target. The study also ignores that lower-income earners receive larger Social Security payouts, so their savings do not need to be as high.

Still, there's plenty of bad news to go around. America's personal savings rate is a fraction of what it once was. According to data from the Federal Reserve Bank of St. Louis, personal savings rates fell from a high of 17 percent in April 1975 to a low of 2.2 percent in September 2005. Since September 2007, there has been a noticeable increase in savings-probably because the experience of watching assets melt in the crisis triggered an impulse to pay down debts. But if history is our guide, this uptick in savings is likely to be short-lived.

This is problematic, because low savings means less capital accumulation, without which economic growth slows and well-being stagnates. A long list of academic papers documents the connection between the decline in savings over the decades prior to the recession and declines in things like domestic investment and real wage growth.

At the Brookings Institution, economists Ian Hathaway and Robert E. Litan recently released a paper showing that American business is increasingly dominated by older firms. That finding has troubling implications. The literature shows that young firms are the engine of job creation in America-not small businesses, despite what you read in the press and hear from the politicians-so fewer new businesses means fewer new jobs. And one reason for the decline in the number of new businesses, says the Cato Institute's Mark Calabria, is the decline in the personal savings rate. "According to the Census Bureau's Survey of Business Owners, the number one, by a long shot, source of capital for new businesses is the personal savings of the owner," he has written.

Faced with this evidence, progressives would like to beef up Social Security. But the program already faces a $10 trillion funding shortfall, and economists have found that its existence creates disincentives to work and save. In other words, a bigger Social Security program could make a serious problem worse. "Workers' payroll taxes are used to fund Social Security benefits, and some studies have estimated that every $100 of Social Security wealth crowds out $40 in private saving," says Jason Fichtner, an economist at the Mercatus Center and former Social Security administrator. Fichtner also noted in testimony before a House Ways and Means subcommittee in May 2013 that Social Security's "current design offers substantially negative incentives to work, especially for younger seniors and for secondary earners." Exiting the labor force earlier does not just decrease the individual's income security; it decreases the net output and productivity of the economy as a whole.

Fichtner thinks the government should give people incentives to save more. "For those in lower-income brackets, tax credits could be expanded to provide better incentives for saving," he wrote. "Even something [like] encouraging auto-enrollment whereby employees would automatically be enrolled in a retirement savings plan (with the option to opt out) could go a long way toward increasing personal savings."

Not everyone agrees. Matthew Mitchell, also of Mercatus (where I work), is opposed to the government creating incentives to save. "People often talk as if saving is always objectively better than consuming," he says. "But that is like saying beer is objectively better than wine. The truth is that value is subjective. I may think that right now in my life, it makes sense to save the next dollar I earn rather than to spend it. But just because that is the right choice for me does not mean it is the right choice for you."

Fichtner wants to increase private saving so that taxpayers are not asked to foot the bill for people's bad decisions. A reasonable concern, but when government tries to encourage people to do one thing over another, it usually leads to malinvestment. Resources artificially flow to certain goods above and beyond the point where any real value is created. That leads to bubbles, and when they pop, as the Great Recession has shown us, the loss of wealth can be disastrous.

If people are saving too little but incentives to save more could lead to malinvestment, what should be done? Let's start by eliminating policies that penalize savings or artificially boost consumption. Replacing our current tax system with a consumption-based tax would create a more level playing field between consumption and savings. Ending the Federal Reserve's zero-interest policies would eliminate their large disincentive to defer consumption. And eliminating efforts to buoy homeownership would get us out of the business of encouraging people to take on more personal debt in exchange for an investment that, thanks to the Fed's monetary policy, offers weak returns.

Replacing Social Security with private accounts would help as well. In a 1997 paper for the Federal Reserve Board of Governors, economist Julia Lynn Coronado looked at the quasi-privatization of social insurance in Chile. Its effect, she found, was an increase in national savings of 2 percent of GDP.

Social Security is broken. Future seniors already face a 25 percent cut to their benefits when the trust funds dry up in 2033. We might as well put the program out of its misery and, in the process, remove one of the biggest disincentives to save.

NEXT: Widespread Anger Following No Indictment of Ferguson Officer

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Michael Brown was just “saving money” and look what that cost him.

    1. Hey, that’s just one more poor black man who won’t live long enough to collect Social Security so rich white women can collect more of it

      1. He didn’t live long enough to have paid in much either, so it’s pretty much a wash.

    2. It’s odd that Veronique de Rugy would be unhappy about the Social Security Income: she is a personal recipient of such federal government payments. She receives about $1815.00 monthly in Social Security benefits.

  2. Maybe the Fed keeping interest rates artificially below the rate of inflation is why Americans don’t save? The entire monetary system is designed to fuck the average person who tries to save and benefit the super rich who can game the system.

    You want Americans to save more? Start by shooting the entire Federal Reserve Board.

    1. I second this motion.

          1. THE MOTION HAS PASSED!

            UNLEASH THE KRAKEN

    2. yep this. Want people to start more businesses? maybe stop giving free money to banks and they will start making investments again.

    3. Honestly anybody with any basic financial acumen can see they are fucking everyday people over with this scheme, no wonder why most progressives aren’t talking about this.

      1. It is a giant Gruberesque lie. The typical economic illiterate prog actually believes the way to prosparity is just printing money and giving shit away. They have no idea the effects of that has on average people and how the super rich benefit from it. And they wake up every day thinking they are all about protecting the little guy. Amazing.

        1. I don’t think the typical progressive(or really most conservatives) has any inkling of what the federal reserve is or does. Which is funny since you would figure it would be right in their hate the rich/bankers/corporations/citizens united wheel house. Or they just don’t want out point out a inverse redistribution scheme perpetuated by the gov.

          1. What amazes me about most people, left and right, is how little they understand how government works. The Progs claim government is the savior of all things yet really have no idea how it works in practice. The right can be just as bad in that they think it is the root of all evil but don’t understand how it works and thus have no idea how to stop it or worse think it can be fixed if we just made it more like the private sector, as if the government could ever be run like a business.

            1. The right can be just as bad in that they think it is the root of all evil but don’t understand how it works and thus have no idea how to stop it or worse think it can be fixed if we just made it more like the private sector, as if the government could ever be run like a business.

              What amazes me about conservatives is their principled disdain for big government programs, but when it comes to the Department of Defense many of them haven’t met a program that was big enough. It’s not as though that one single bureaucracy is exempt from all the shortcomings that characterize every other tax funded agency but nonetheless their support for it is unswerving.

              1. Conservatives are generally classical liberals gripped by often illogical fear of the loss of their way of life. Homosexuals, Mexicans, Drugs, and invading countries are all things they fear greatly as a possible threat to their way of life, which accounts for their actions on many of these issues.

                If we as libertarians can allay their irrational fears by showing that their fears are counterproductive to their actual goals, we have some pretty good allies.

                At least the conservative can usually be convinced through logic, whereas it is all but impossible to convince a progressive of anything that isn’t strictly emotionally based.

                1. Use that against them.

                  Beat into their heads that Social Security is inherently racially biased (which it is), then watch they demand the program be eliminated

                2. If we as libertarians can allay their irrational fears by showing that their fears are counterproductive to their actual goals, we have some pretty good allies.

                  LOL. I am not sure how making mawkish appeals to “fairness to illegal immigrants” and enforcing the Prog idea that it is the government’s job to eliiminate all fairness helps that.

                  And while we are at it, Liberarians are masters of telling people to suck it up. Oh, enslaved in the antelbellum South and are happy to see the civil war free you, fuck you you should have waited for the market to free you instead of the evil Lincolm. Lost your job because of a downturn, fuck you and get another one you bum. You are a Mexican who moved here illegally, I am a Libertarian and I am here to help and make sure you are treated fairly no matter what the rule of law says. Are a gay and worry you might have to make a power of attorney because you can’t get a marriage license, God damn it that is a moral imperative requiring any means necessary to fix.

                  I only have kid about pot Mexicans and Ass sex. Libertarians think anything involving immigrants or gays is immediately an absolute civil rights disaster warranting any means necessary to fix. Everyone else who has a problem is told to fuck off and let the market solve it. Slaves were supposed to remain slaves for another two decades because the evil Lincoln had to be stopped. Gays can’t wait another day for the various states to vote them marriage.

                  1. Whoa, hit a nerve there, I guess. Seems like you’re grouping the left-libertarians (oxy-moron, if you ask me) with the rest of us.

                    Thought you had paid more attention, John.

                    1. Didn’t direct that at you PaulW. It was more directed at the left wing libertarians. No offense intended.

                    2. Sorry if most libertarians understand that societal changes were underway that would have eliminated slavery anyway, and would have done it much more peacefully and with much better consequences for racial relations in the future.

                      Never thought you to be so stupid as to believe the government ended slavery by murdering countless people and consolidating power.

                      Government does not change society. It takes credit whenever it can with a huge fucking show for its own benefit, fuck anyone caught up in it, right?

                      As far as gays, I see people here just as pissed off when a person is forced to bake a gay cake for someone as they are when people like you claim they shouldn’t have equal protection under the law.

                      As far as Mexicans, yes, about half of my fellow libertarians are absolutely retarded on immigration, I’ll give you that.

                      As far as personal responsibility, John, I thought that was something we libertarians and conservatives agreed upon? Lost your job in the economic downturn? Did you save for a crisis? Do you pay unemployment insurance? Not my fucking problem. I could lose my job for a couple of years and be okay, because I am responsible. I do not need to be responsible for yours or anyone else’s poor life decisions. I will help, but fuck you if you think it is cool to steal from me at the point of a gun.

                    3. Ah, sorry too. I have a lot of respect for you, shouldn’t be so harsh, I know you’re far from being stupid. Just got done responding to Tony on another thread, so a bit fired up.

                3. “At least the conservative can usually be convinced through logic”

                  HUH? Never met a “conservative” that has any clue what logic is. Evolution?

                  1. Yep, no conservatives understand what Evolution is or agree with the theory. They’re all just a bunch of Christfags that think he rode dinosaurs.

              2. And when a prog screams that eliminating a government program will cost jobs, conservatives will respond, correctly, that government programs shouldn’t be about jobs but about value. But when someone suggests cutting DOD funding conservatives protest that it will cost jobs.

                1. LOL. What conservative thinks that? Answer: NONE. What conservative has shrunk the government?

              3. Conservatives also can get a boner over NASA as well.

                And, to be honest, all the parochial “conservatives” out where I live complain about “welfare” but are counting down the days until they can get their Social Security and Medicare benefits.

                In the end, and not to get into too many semantic slights of hand, there really aren’t many real fiscal conservatives anymore. Everyone wants their slice of pie and expect to get it from the government. There’s just a bevy of social issues that divide the parasites, with a blurring of how to define entitlements around SOME behaviors that are part of the social issue debates.

                1. And, to be honest, all the parochial “conservatives” out where I live complain about “welfare” but are counting down the days until they can get their Social Security and Medicare benefits

                  Everyone else is getting over, why shouldn’t they?

                  The reason why honest people object to doing something about those programs is that they understand that the money saved will just be given to someone else. Why should anyone agree to cut in their SS benefits so long as a single tax dollar is going for drug rehab and various other social services trying to cure self inflicted problems?

                  I don’t blame those people a bit and it drives me nuts when Libertarians put them down. Those people are doing the exact rational thing given the circumstances. And they have every right to. Who says they have to jump on the grenade to save the country while so many other people are getting over?

                  1. I’m glad you brought up the ‘evil Lincoln’. The guy prosecuted grossly bloody war as the head of a government formed by secession, in order to prevent secession. Preserving Mr Lincoln’s empire was totally worth the massive loss of life and liberty.

                  2. …the victims, who opposed such laws, have a clear right to any refund of their own money?and they would not advance the cause of freedom if they left their money unclaimed, for the benefit of the welfare-state administration.

                    -Ayn Rand

                    So one should definitely vote against it, but I agree with Rand here, I see no issue in taking back that which you can. It is not like the government is going to refund the money from who they stole it from to give to you, they’ll just spend it elsewhere.

                  3. “Why should anyone agree to cut in their SS benefits so long as a single tax dollar is going for drug rehab and various other social services trying to cure self inflicted problems?”

                    This blatant hypocrisy is why I drifted from conservatism to libertarianism. Not saving for retirement is a self inflicted problem, John. Social Security and Medicaid are way more big government and socialistic than the PPACA, for example. And they’re way more entitlementy (to invent a word).

                    But the PPACA is opposed, because it’s new, and Social Security is embraced, because it’s old. Conservatism really doesn’t have actual values or a moral philosophy as far as I can tell. It really is just a reactionary emotional movement to conserve whatever Conservatives are comfortable with. In thirty years, O-care will be the new Social Security and Conservatives will fight for it tooth and nail.

              4. It’s odd that Veronique de Rugy would be unhappy about the Social Security Income: she is a personal recipient of such federal government payments. She receives about $1815.00 monthly in Social Security benefits.

        2. A recent issue of Business Week had an adoring article on Keynesian nonsense and how it’s just the right prescription again.

          1. A recent edition of Business Week had an adoring article on Keynesian nonsense….

            What, you don’t believe in free lunches?!

            1. I’m not economist, but it seems to me this is what happens with Keynesian economics:

              Government covers up issues with economy.

              Economy never truly corrects itself, same issues are still there, but not as noticeable.

              Government covers up other issues with economy.

              Economy never truly corrects itself, same issues still there, but not as noticable.

              Keep repeating until:

              All previous issues rear their ugly head almost at once when set off by the right market forces, government finds itself incapable of covering up issues with economy, prolonged recession, until it can finally manage to cover up the issues.

              Next time, depression, economic collapse? Who knows.

              About right?

          2. If only it’s not too late, and we can recovery from the years of austerity!

        3. They believe that money, wealth and value are synonyms.

    4. Maybe the Fed keeping interest rates artificially below the rate of inflation is why Americans don’t save?

      Not to mention the effects of a roughly 60-year run of inflation itself. Even incremental increases will compound over time.

      Remember that the Fed’s mandate is to keep prices “stable,” but if things cost 10 times more than they did in, say, 1950, then logic would dictate that the Fed has failed its mandate.

      1. Even the Fed’s mandate is nonsense. If its mandate were only to keep prices stable, it might be able to do its job. The problem is that it also is mandated to smooth out the business cycle and keep the economy growing. You cannot do both. Keeping prices stable requires letting the business cycle work itself out and not intervening during recessions. Since recessions cause a lot more political pain than long term inflation, they have chosen to try and intervene in the business cycle and completely given up on price stability.

        Even worse, their efforts at smoothing the business cycle have largely failed giving us inflation and recessions or stagflation.

        1. Even worse, their efforts at smoothing the business cycle have largely failed giving us inflation and recessions or stagflation.

          Some prog tried to argue with me once that inflation wasn’t a problem by posting a chart that showed we’d had huge inflation spikes prior to the Fed coming into existence. When I pointed out that we also had huge deflation spikes that brought prices back to previous levels, and that even a 2% inflation increase will degrade buying power when you compound that over 50 years, he literally could not understand the logic. And what’s laughable is that he used Carl Sagan as his avatar.

          How seriously can anyone take these people when they don’t understand something that 8th-graders ought to be able to process?

          1. When I pointed out that we also had huge deflation spikes that brought prices back to previous levels, and that even a 2% inflation increase will degrade buying power when you compound that over 50 years, he literally could not understand the logic. And what’s laughable is that he used Carl Sagan as his avatar.

            It often surprises me how “educated” people often can’t understand the simple arithmetic of percentage.

            1. sasob
              It often surprises me how “educated” people often can’t understand the simple arithmetic of percentage.

              It’s not just progs. Gold bugs, like Ron Paul, cannot fathom how percentages affect the Law of Supply and Demand — which determines the price of money, and of everything else!

          2. Some prog tried to argue with me once that inflation wasn’t a problem by posting a chart that showed we’d had huge inflation spikes prior to the Fed coming into existence

            Umm, actually, we had very 150 years of steady DEflation before the Fed, tracing back to before our founding, as the gold standard ALSO failed to create stable prics. Inflation rose only during wars, from government borrowing to finance wartime spending.

            This is essentially how libertarian economist Milton Friedman won his Nobel. The price of money is determined by the Law of Supply and Demand (gasp). The Supply of gold could not keep up with the Demand for gold as the Industrial Revolution escalated. That’s why silver was added, but even that was not enough.

            Point being: both the Fed and the Gold standard failed to maintain stable prices. Friedman proposed, based on the Law of Supply and Demand, that money supply be slowly expanded to meet the anticipated future need for money. If the DEMAND for currency is anticipated to increase by an average 3% per year for the next 50 years, then the money SUPPLY must increase by the same 3% per year — per the simple Law of Supply and Demand.

            Common sense.

        2. Problem is that inflation is needed to service our debt.

          It is just a hidden tax. A brilliant one, if you think about it, as many people are too stupid to realize they’re in a pot of water with the burner set on high. They’ll take their 3% raise next year and think they came out for the better, even if they’re paying 5% more for everything.

          1. There is nothing brilliant about it. It’s just dishonesty perpetrated on people who are honest for the most part and who figure most everyone else is, too. It doesn’t take a genius to con trusting people.

            1. From the governments perspective, it is indeed brilliant.

              1. Government is not usually composed of the brightest in a society. Mostly it is people who are smart enough to know how to steal wealth but not smart enough to know how to create it in the first place.

          2. does someone have to be stupid to be powerless?

    5. Not only that but they keep pushing inflation as well. The very rich that own the assets that rise with inflation are fine. The average person saving and needing to buy those goods to live continues to be harmed by the “invisible” tax from the Fed.

  3. That’s why they’re poor.

  4. 1) required personal finance courses in public school every year from 5th grade up
    2) deal with the Fed
    3) make eviction and foreclosure less of a pain in the ass for the creditor/landlord
    4) stop arresting people for feeding the homeless
    5) immediately halt social security contributions and begin the process of purging everybody’s contributions to date.

    1. The landlord tenent laws cause as much misery as any set of laws there is. The biggest reason why there is real homelessness in this country, as opposed to people who choose to be homeless because they are mentally ill or just fucking bums who need to be put in work camps, is because it costs a fortune to rent a place to live thanks to these laws.

      It sounds so appealing to keep the evil land lords from evicting people. In reality all it does is make landlords incredibly careful about who they rent to and them to require large security deposits and good credit. If you have bad credit and no way to obtain two or three thousand dollars cash, thanks to these laws you flat out cannot rent a place to live in most big cities even if you have a job. It is just fucking evil.

      1. I tried being a landlord. Rented out a very nice small house, low rent, completely remodeled. God was it a nightmare. Never again. Landlords are some of the unsung heroes of this world.

        1. Thanks to these laws you are one bad tenent from being completely fucked. So no landlord ever rents to anyone who isn’t a low risk on paper. And a lot of landlords don’t rent or do it under the table. This completely fucks the very people the laws are sold to help. Basically, the woman whose deadbeat husband runs up a bunch of debt and leaves her pennyless ends up homeless and in a shelter so that we can have laws that make it harder to evict crack dealers.

          This is one of the many reasons I hate urban community activists, who push these sorts of laws and are largely responsible for them being enacted, with the heat of a thousand suns.

          1. You forgot to mention how prices increase because the risk to landlords is so much higher with these laws on the books.

            I can’t understand how the American people freely allow such fucking morons to set any policy that even touches on economics. This is basic shit, and our leaders either don’t understand it or don’t give a fuck. And it has been like this since I’ve been alive.

            1. Nevermind you didn’t forget to mention.

              I was just reiterating. Yeah 🙂

      2. Housing laws, building codes, and zoning restrictions generally. Government does all it can to make housing expensive then turns around with stolen money to lavish affordable housing subsidies upon the connected few.

        1. Coincidence?

          1. The usual break your legs and had you crutches sourced from a brother in law.

            1. Hand you

        2. hen turns around with stolen money to lavish affordable housing subsidies upon the connected few.

          Not many would agree that the middle class is “few.”

    2. It is not just the general population that are economic morons. In my first macroeconomics course in college I was fed Keynesian multiplier BS, including the alleged math proof behind it. One problem: the math focused solely on the impact of the dollars spent by the government and its subsequent impacts. There was no consideration given to where that initial spending came from and what would have happened in the absence of the government spending. Looking at all sides of an action is common sense, yet economic “experts” repeat this mistake all the time.

      1. yet economic “experts” repeat this mistake all the time.

        Including the dumbfuck experts on our side. The multiplier exists, despite the brainwashing we get. But it’s a counting error. Government wages apply to GDP. Private wages do not (only tha

        1. continued (got away from me)

          Government wages apply to GDP. Private wages do not (only that portion which is consumed, Now assume a government worker and a private worker, each earning the same gross, and each consuming the same 25% of gross income. ONLY the government wages (spending) increases GDP. Do the math.

          The government worker increases GDP by (100 + 25 =) 125% of wages.

          The private worker increases GDP by (0 + 25 =) 25% of wages.

          Simple enough. Who explains that to Reason, Cato and Mercatus?

  5. Fichtner thinks the government should give people incentives to save more.

    Fichtner must have just arrived from another planet. The US government goes out of its way to encourage spending. Remember the Bush tax refund check everyone was supposed to spend to boost the economy? Our govt depends on cheap debt to finance its programs and deficits. No way they will let the Fed raise rates.

    Let’s start by eliminating policies that penalize savings or artificially boost consumption. Replacing our current tax system with a consumption-based tax would create a more level playing field between consumption and savings.

    Oh please, no. Europe has a VAT tax…AND an income tax. You will end up with both. And the consumption tax will be the most regressive like a flat tax would be. Much better to lower the bottom marginal tiers, slightly raise marginal tiers for people earning over millions/year and reinstate the deductions we had forty years ago, like we had in the 60s and 70s.

    Homes are more like liabilities, not assets, so I agree with your point to stop promoting it as a savings account.

    1. Homes are more like liabilities, not assets, so I agree with your point to stop promoting it as a savings account.

      Homes are only “assets” if you’re in a hot market and are flipping. Otherwise they depreciate just like anything else.

      Not to mention that banks also essentially run a cartel on home prices by setting the value of the home based on other homes in the neighborhood rather than letting the buyer and seller determine the actual value, and subsequently lending based on the buyer’s credit-worthiness.

      1. Homes are only “assets” if you’re in a hot market and are flipping. Otherwise they depreciate just like anything else.

        Yes. When you live in and consume it, and pay taxes and insurance on it, it’s not an asset. When it’s employed to make money, then it’s an asset. Hardly any Americans understand that critical concept. I’ve filed so many BKs for people who buy houses they couldn’t afford.

        1. Hardly any Americans understand that critical concept.

          On the other hand, many Americans understand exactly what people mean when they say that, and simply disagree completely as to whether the “critical concept” is true.

          The concept that property must earn income to qualify as an ‘asset’ is fairly new, and I for one have yet to see a convincing argument that the word should be redefined in that way.

          1. Everything depreciates and requires maintenance. I don’t understand how a home is not an asset because it does the same thing that every other asset does?

            Maybe he means a home is not a smart investment. Possibly, but I fail to see how it is worse than renting, or the alternative of living in a van or something.

            1. Maybe he means a home is not a smart investment. Possibly, but I fail to see how it is worse than renting, or the alternative of living in a van or something.

              The point is that a home is something to live in long term, but far too many people see it as a piggy bank to draw money against. And a 30-year loan for first-time homebuyers in particular can end up being a massive money sink. Even with today’s low interest rates, you’ll still end up spending 2.5-3 times the purchase price of the home over the life of the loan.

              The poisonous aspect of this particular system is that you need to buy a house and stay in it for 50 years with inflation slowly mitigating the effects of the loan. But that inflation compounded over time ends up screwing people 50 years down the line who now need to take out a loan that’s ten times what you took out.

              If people aren’t saving, it’s not just because of a consumerist mentality–it’s also because they think it’s not going to matter in the end how much they save, their buying power and ability to keep a roof over their head is going to be nuked by inflation.

              1. If people aren’t saving, it’s not just because of a consumerist mentality–it’s also because they think it’s not going to matter in the end how much they save, their buying power and ability to keep a roof over their head is going to be nuked by inflation.

                Agreed.

              2. So then the problem is stupid people, not that it is stupid to own a home if you do it responsibly.

                If rent and mortgage are roughly the same, how is it not better to put a portion of that money into something you can extract some value from, rather than no value? And that value that is added each time you make your mortgage payment is generally going to keep up with inflation.

                Basically, you can rent for 30 years at 1500 dollars a month and pay 540k dollars with nothing to show, or you can pay a mortgage for 30 years for 540k dollars and have a 250k dollar asset to show for it. That is a big difference. Not even to mention that your rent WILL increase with inflation, while your mortgage payment will not.

                1. Assuming that mortgage interest rates and inflation rates remain roughly where they have been the last decade (inflation around 2.5% annually, interest rates ~6%) over 30 years buying a house will cost somewhere between 1/2 and 1/3 of what it would cost to rent that same home for that same period of time.

                  However what do you think the odds are that the economy will remain relatively stable over the next 10 years forget the next 30 years.

                  More importantly, how reliable is your income, your career, your family stuation, your health, etc.

                  Renting is by far preferable to owning when there is any significant uncertainty in your life or the economy in general because the minute you start flipping homes or borrowing against the equity you are building in it that equation changes and it rapidly changes into the favor of the renter.

                2. So then the problem is stupid people, not that it is stupid to own a home if you do it responsibly.

                  No, the problem is the compound effects of inflation.

                  Basically, you can rent for 30 years at 1500 dollars a month and pay 540k dollars with nothing to show, or you can pay a mortgage for 30 years for 540k dollars and have a 250k dollar asset to show for it.

                  Sorry but this is cherry-picked data at its finest. $1500 a month for rent? Maybe in hot real estate markets or hyper-urbanized areas but even in most big cities you’ll be able to find a decent place for $1000 or less.

                  Not even to mention that your rent WILL increase with inflation, while your mortgage payment will not.

                  And as I’ve said, that’s the whole fucking problem. Allow deflation to occur and the compound effects of inflation impact neither renters nor people trying to get into a market after 50 years of steady erosion of purchasing power. But we haven’t had actual deflation over that time frame except for right after the most recent recession, and that ended very quickly.

                  You know who inflation helps? The debtor class. That’s why you’re always hearing Krugnuts whinging about people wanting deflation to take place.

                  1. Deflation is considered worse because of our debt based economy. The paper on the assets has lost money and that puts banks and bond holders in a bad position.

                    You can only have deflation in a cash based economy.

      2. Homes are only “assets” if you’re in a hot market and are flipping. Otherwise they depreciate just like anything else.

        Assets cannot depreciate?

        1. Is an underwater house an “asset” or a liability?

          1. Is an underwater house an asset or liability? The house is an asset and the loan is a liability. It’s that way by definition. If you think the house is a liability in this situation then you can never tell whether anything is an asset unless you know how it was financed.

          2. The house is an asset, the mortgage is a liability.

            1. Or what Fairbanks said.

          3. I believe that would be a house boat. The submarine variety.

  6. Why should anyone save? They’ll just end up voting to take what they need from us suckers who did scrimp.

    1. So hide assets, uh, in legal ways only, of course.

      1. Assets? What assets?

    2. When they forgive all those student loans, it will be SHTF time.

      1. They won’t forgive them.

    3. “You didn’t build that 401k or IRA that belongs to all of us.”
      “It’s not fair that you were privileged/educated enough to understand the importance of saving.”

      The logic practically rights itself.

      1. “It’s not fair that some have so much more than others.”

        /Tony

    4. This is going to happen anyway and in some respects already is.

      Federal debt is $17T and unfunded liabilities are around $100T, throw in the states that are going to want bailouts and the federal government has no choice but to confiscate all wealth either outright or by inflation.

      1. At least if they do it by inflation, those who are nimble enough can take rational measures to counter. With confiscation we’re all screwed.

        1. They’ll do it by inflation, of course. That allows themselves and the rest of the elite to keep their wealth intact – maybe even to increase it.

    5. ^^THIS^^

      You said it Citizen Nothing. Unless you have big money that you can hide from the government, it is a good bet that any money you save is eventually going to be confiscated in the name of fairness. You see 40 years from now when you retire it just won’t be fair for someone who worked and saved and did the responsible thing to live better than someone who spent their entire lives as a criminal or a bum and spent every dime they ever had as soon as they made it. That just won’t be fair and the government is going to have to even that out. Afterall, that savings, you didn’t build that you know.

  7. Why Don’t Americans Save Their Money?

    Incentives, how do they work? Both ways as it turns out.

  8. Wait. Confiscatory policies are what creates a viable future for the government.

    So how does it possess the monetary intelligence to encourage the foresight of its citizens in order that they may save money for an aging future?

    If it actually led by example the collective mind of government would have to condone burglary as way to maintain a respectable existence as an aged one.

  9. 92 percent of Americans believe we face a retirement crisis and that government should act now.

    “It’s a CRISIS! They must do SOMETHING!”

  10. As had already been mentioned before me, we don’t save because our money is — purposefully — being devalued. There is no economic reason for the average Joe to save.

  11. Government receipts as percentage of GDP was 17.5% in 1975, and is about 21% today.

    Energy costs less than 4 cents per kwh in 1975, compared to over 14 cents per kwh today. Oil 15 dollars per barrel as to whatever it is now.

    Food costs as percentage of income have dropped at least in the grand scheme, but even that has been rising for quite a few years it seems.

    How are Americans supposed to save in this environment? The cost of living has skyrocketed, and the middle and upper middle class are getting squeezed for all they are able by a corrupt and incompetent government who steals their money and puts it in the hands of non-producers.

  12. I started buying hard goods a while ago. Inflation in the cost of real goods I actually use, and the inability to make anything from investing (beyond inflation) = I decided to start buying STUFF, so at least I have tools and guns and things I can use to keep myself and my family alive if/when the worst comes. Or at least try.

    And if it doesn’t all go to hell and I live to 100? He who dies with the most toys gets to play with them till he’s dead – I’ll have a good time.

      1. I have CASES of wine, moonshine, vodka and whisky.

        CASES 🙂

  13. Just shut the fuck up. People who agree with you about economic policy destroyed pensions and they destroyed wage growth for the middle class. People don’t save enough because they don’t have enough money to save. That a significant portion of the country doesn’t have enough for retirement means only that SS is necessary so that these retirees don’t, like, starve. Plus, you’re never going to win this politically (but you may get Republicans to gut SS while distracting everyone with shiny slogans about freedom). People’s ability to feed themselves is more important than your stupid kleptocratic ideology being proved right.

    1. Oh, they destroyed pensions… It wasn’t that the pensions were never viable in the first place? Thanks for enlightening us, Tony.

      Fucking moron. Please find a way to rid yourself from our gene pool.

      1. We were sold alternatives to pensions that, shock, left us with less retirement money and left Finance with a lot more in fees. This was not a natural evolution, it was a strategy. Sadly your entire worldview is dedicated to defending your own fleecers.

        1. Hey fucktard, those pensions weren’t viable in the first place, meaning you never would have seen it anyway.

          You might get less than you were promised, but you get much more than you were going to get.

          So absolutely retarded it amazes me, Tony. It really does.

      2. I love how it shows up late to dead threads to post its spittle and drool. It’s almost showing sentience, by doing that, as it knows it will be destroyed with arguments based on logic, reason and experience but can’t bear the pain by doing so when the thread is live.

    2. You would agree demographics also play an important role, correct Tony?

      1. Meaning what? The demographics of wealth? We could retake all the wealth that was siphoned from the middle class and handed to the 1% and use some of it to buttress Social Security, a relatively easy thing? Sure, those demographics matter.

        1. Why would you want to siphon money to such an inefficient and ineffective program such as SS?

          Try doing out the math, 13% of your income goes to SS (6.5% from you, 6.5% from your employer, which is basically you, as it is not but a hidden tax). Say your household makes 50k per year. Compound that at 7% over your working life of say 40 years, you have 1.4mil in the bank. Take out 4% of that every year when you retire, and you actually make money in retirement while still living at the same level as you did during your working life. You could probably even semi-retire much younger than 67.

          Simplified, but this basic idea is why SS sucks, not just because it is a government program, but because it is a fucking stupid set up.

          1. Tony doesn’t do math because there is never a variable for feelings.

          2. I personally could get a better return on investment, but Social Security is not a personal investment account, it’s a floor on the level of poverty we as a society tolerate for old people.

            1. So lets compromise, you force people to put that 13% into a retirement account that they can’t touch until they’re at least 60 at the end of a gun.

              You get your rocks off on being a government-skirt-hiding-behind tough guy, I get to retire and still enjoy it. We both win.

              1. Hold on their hoss. Keep in mind this ‘retirement account’ will be administered by Uncle Sam – who will abscond with the cash and leave you a big fat IOU.

                If the government really wanted you to save for your retirement (it doesn’t) it could easily create the incentives to do so.

                1. It need not be, could be just like a 401k.

                  Not saying that the government couldn’t steal that from you as well, but the government can steal anything from you it wishes already. Don’t see how it is much different.

            2. Tony:

              Social Security is not a personal investment account, it’s a floor on the level of poverty we as a society tolerate for old people.

              You can call it “social insurance”, “poverty management”, or “sunshine and moonbeams” if you want, but you’re not really adding to the conversation that way. You can set the floor on the poverty for old people in a lot of ways. It doesn’t magically become awesome because of good intentions.

              As PaulW pointed out, SS taxes people at a rate such that, if they were actually saving that for retirement, they’d probably be very well off. SS taxes at 12%, while most retirement advise recommends saving 10-15%.

              Instead of having an actual asset at the end of that, SS loans it all to the government, buying government bonds. So, the primary asset of SS is the promise to tax in the future. Kleptocratic society indeed.

          3. Compound that at 7% over your working life of say 40 years, you have 1.4mil in the bank.

            Sorry but this is way too optimistic for the average person. In addition, SS is heavily weighted to the working poor. What about people making 22K a year?

            1. Sorry but this is way too optimistic for the average person.

              Actually, I think the stock market itself would beat 7% most years.

              Isn’t the average return over the last 100 years something like 9%, with 10% over the last 20 years, and 7% over the last 10 years, including the housing crisis.

              If that’s the problem, then I think the solution would involve either financial planning counseling, or mandatory retirement savings in accounts that aren’t completely stupid. Think of it like Obamacare for people who have no idea how to invest: please choose one of these federally approved funds that aren’t managed by retards.

              Either way, I think we’re a long way from making SS look awesome.

              What about people making 22K a year?

              How about a program that targets actual, poor people, instead of mandating that every person participates in a ridiculous bond-buying, tax-the-future-on-your-behalf asset program. Because I trust myself more to manage my assets than the promises of politicians.

              1. Personally, I find the entire SS system to be completely offensive.

                If they want to force me to take care of poor old people, fine. I like old people. I know they’re not all assholes, and while I also know that I’ll be paying for a few poor, old assholes, I can deal with that. Government does worse already, and that’s not the top item on my list of grievances.

                However, if they’re going to confiscate 12% of my income over my entire life to pay for every, single old person in the country, and then, tell me that I’ve contributed enough to earn the right to force young working people to pay for my ass in my retirement, and the only way to get back anything for that 12% of my fucking income is to make some poor working bastards give me 12% of their entire year’s salary

                I don’t want young, working americans giving me their money. I don’t need it. And I damn well resent the fact that I’m forking over 12% of my income over to other rich, old assholes who certainly don’t feel the same way, and think they’ve earned it.

                As far as I’m concerned, their 12% that they took is gone. I’m not “getting it back” by making some poor slobs fork over their cash. Of course, it’s not like they’re going to tax anyone less just for me, which makes it even more offensive.

                I’m surprised more people don’t feel the same way. I’m not a damn charity case, and too many people who are tell well off are too damn comfortable pretending that they are, or deserve to be, anyway, because taxes

                1. Are you one of those immigrants mad that you have to pay in and you can’t find a way to get your parents who never contributed a nickel into the system on welfare? Because they have the same attitude as you.

                  I am paying in so that my grandfather and grandmother could live a decent life in their old age. Yes, like all depression era people, they never spent a nickel they didn’t need to and saved enough to not really need it. However when the coal mines closed, all those pension promises just disappeared like all the promises from the “free market” so SS and Medicare mean they won’t be bankrupted by medical and housing costs.

                  I am also paying in so the same is true for my father and mother. You see the system isn’t all about just me.

                  1. Are you one of those immigrants mad that you have to pay in and you can’t find a way to get your parents who never contributed a nickel into the system on welfare? Because they have the same attitude as you.

                    Your posts are incoherent. It’s like you’re not even reading what you’re replying to. If you think those are the same thing, then you need to learn how to think.

                    I am paying in so that my grandfather and grandmother could live a decent life in their old age….I am also paying in so the same is true for my father and mother. You see the system isn’t all about just me.

                    If you want to set some money aside for your grandparents and parents, there are better ways to do that than SS. Unless, without SS, you would be deciding on your own to set aside 12% of your income every year, putting it into government bonds, and shelling it out to every old person regardless of their income or wealth, then the main reason you’re paying in is because the government taxes you, and if you don’t pay, you’ll go to jail. If something like SS is what you would do left on your own with like-minded people, then you don’t need SS. Go do it.

                    And, what a coincidence that the only way you want to take care of gramps happens to have the unintended side effect of putting working stiffs on the hook for funding your own retirement. That doesn’t enter your mind at all, though, because it’s not about you. You’re really just a giver.

                    1. The only one incoherent is you and calling somebody “economically illiterate” just shows you are a fool who doesn’t know the difference between philosophy and science. Economics is not science so anybody touting their superior knowledge of economics is an idiot.

                      Your griping about SS shows you don;t know anything about it. You crying about “your” money shows you don’t know what you are talking about. SS was never about you it was always about one generation taking care of another. Don’t like it, tough shit.

              2. Looking at a historical trends is meaningless since choosing your end points makes a big difference. Your return would depend heavily on you catching a major secular bull market.

                In addition, stocks are only cheap and a good investment when very little money is chasing them. As we saw in the dot com, roaring 20s, nifty fifty’s and today’s boom money chasing stocks brings out all the worthless scams waiting to get peoples money like Facebook and Pimentoloaf.com.

                Just how many really good investments are there for the new money? Will it fund basic research? No because there is no return in sight. Will it fund new products? Is there any shortage of money funding them now, NO. So what will all this money do, build condos in Houston that are later torn down to relieve the glut of housing like in the 80s?

                The reason why SS doesn’t disrupt the economy is because it is just like a big real estate trust collecting dividends from every company (worker) and distributing it to the “shareholders”. It isn’t making decisions that effect the stock market, the commodities market or the real estate market.

                1. Imagine if all that money went into stocks. How much malinvestment would there be and how much of that wealth would end up in the pockets of slick operators. Imagine the S&L crisis and housing crisis crash times 10.

                  Reagan’s lack of oversight in the thrift industry lead to crooks moving into the thrift industry. However, you only went to jail for fraud. Funding your own Taj Mahal projects was perfectly legal as long as there was no paper trail indicating you knew it was just to line your pockets. By the time of the housing bubble Wall Street and their lawyers knew how to commit white collar crime and stay out of prison. Imagine those same crooks with access to all the SS money.

                2. If you think taxing every single working person 12% of their income and shoving it into bonds doesn’t disrupt the market at all because it’s not going into private assets, then you’re economically illiterate. Is government spending somehow immune to bad invesment, in some way that capital investment isn’t? Your argument is incredibly one-sided, and has huge, gaping blind spots. It’s basically one of nirvana fallacy, wrapped in multiple contradictions

                  For example, what does funding basic research have to do with SS? Like, we need SS to fund basic research that no one really wants to fund? Gee, I’d hate to have that happen. Wouldn’t want any market distorting, either.because nothing says “no market distortions” like using the government to fund things that no one wants to pay for themselves.

                  1. Those bonds the government buys are not traded on any exchange and are basically just a way to paper over the deficit from income taxes – you can thank Reagan for that. They are not buying private bonds or even US government bonds at the regular auctions so they have no effect in the bond market.

                    Most of your post is ridiculous stream of consciousness drivel all over the place. Try and make some sense. I was pointing out that the idea of all this SS money going into productive investment is ridiculous. Therefore a lot of it will end be stolen or drained away in malinvestment.

                    1. “They are not buying private bonds or even US government bonds at the regular auctions so they have no effect in the bond market.”

                      You do realize that bond market effects aren’t the only market effects, right?

                      Ok, let’s assume that the government decided to put all the money into corporate bonds, that they would hold, no selling. Would you say that his didn’t have an effect on markets, in general?

                      Or, let’s say a bank decides to hold on to a large chunk of bonds, no selling. Does that not have an effect on the market?

                      You know, bonds are just government debt. All the money is spent. Therefore, some of it must be drained away in malinvestment, or stolen, since government spending projects aren’t known for their perfection. Therefore, by your own standards, you must reject SS as it is implemented. Oh, wait: you don’t. Because you’re too ignorant to see that, or you’re your just spouting whatever you think sounds good to sell SS, not even noticing your own double standard. Which is it?

                3. Looking at historic trends is meaningless. …. you could catch a bull market. Stocks suck. I can’t imagine what someone would invest in!

                  Really? Earlier you thought you could estimate the likelihood of the average person’s returns, but now you say that trends are meaningless? Then, how exactly do you think that 7% is optimistic?

                  No, people actually do a pretty good job looking at trends, and they aren’t meaningless. Yeah, someone could catch a bull market, they may catch a bear market. In the end, it tends to balance out towards positive returns over the long-term. We are talking long-term, aren’t we?

                  Also, if this is the way you think about investing, do you actually invest this way? OK, so you can’t invest in stocks, because you just can’t imagine what a good investment would be (appeal to ingorance). Also, you can’t get any meaningful data from stock market trends, and there might be bull or bear markets, so, you don’t invest in stock. So, you restrict your portfolio to a mixture of government bonds, currency, real estate, and …precious metals? Because, somehow, tends in those markets are magically meaningful?

                  If that’s how you invest, then you’re an idiot, and it’s no wonder you want SS to be there for you. If that’s not how you invest, then you’re engaging in a huge performance contradiction by explaining all of this to us, and then investing in a manner totally inconsistent with your analysis. Please inform us of which is the right one.

                4. it is just like a big real estate trust collecting dividends from every company (worker) and distributing it to the “shareholders”.

                  If that’s what you think SS is, then you don’t know what you’re talking about.

                  A real estate trust owns income generating real estate as an asset, which can generate income for the shareholders, and which the shareholders can buy or sell. How the hell is SS like that?

                  Also, earlier, weren’t you talking about how horrible it was that the coal ming pensions ran into trouble? So, taking the analogy further, you must think it would really have been the best thing for those coal miners to put all of their pension money into coal mining corporate bonds, so that, when the coal mines tanked, those pensions would be…in great shape? Because, on the one hand, you’re whining about insecure pensions, and on the other, you’re advocating for a pension scheme in which all of the assets are loaned to the government in government bonds, such that the payout depends on the will of the government to tax people in the future, regardless of economic and political conditions. Yeah, there’s no risk with that.

                  Essentially, you engage in wildly incoherent, contradictory, appeal to ignorance, nirvana fallacy arguments against capital investment as a means of retirement. Then, you just skip analyzing SS with any critical thinking, hand-waving it away as “like a real estate trust”, as if that magically avoids risk and resolves all issues.

                  1. This is what I don’t get with people like you. You make this case that taxing income is some safe, reliable way to take care of people. Then you whine about the risks of private capital investment.

                    Where the hell do you think all that income tax comes from? It comes from people working for companies traded on stock exchanges, with capital investment driving future growth. It comes from real estate investment. It comes from capital investment.

                    If you’re going to tell me that taxing income is a great, risk-free, reliable way to fund people’s retirements, then you’re implicitly stating that the economy, as a whole, is relatively risk free. The same damn economy that scares you so much to invest in. Otherwise, you’re saying that the stock market could tank, real estate could tank, money could tank, and everyone who owns private assets is screwed, but, that’s ok, because everyone’s still making income as if none of that ever happened, and we can just tax that.

                    It’s purely magical thinking, as if the government just does whatever it wants to do regardless of economic conditions, with no costs, even opportunity costs, no “bad” investment, and no risk. I don’t know how you go through life thinking that way.

                    1. Taxing peoples income is safer because it happens in a bull or bear market whether the company makes money or not. It is a lot safer and more predictable than taxing the “gains” from corporations given all the ability in the tax code people have to create losses out of thin air.

                      The economy doesn’t scare me at all since I stopped working a long time ago. What scares me are fools like you who think you have everything figured out when you don’t.

                    2. Yeah, and people can still make investment income and sell assets in a bull or bear market, too. So what’s your point? During the housing crisis, people who stayed in general stock indexes and funds got all their value back within a few years. Meanwhile, SS lost a lot of tax revenue because incomes were down. It’s not like taxes create some magic anti-economy field that gives you whatever money you want to spend. Yeah, a long term economic downturn would be bad for private assets holders, and the SS income taxes, too! Wow! It’s like they both depend on the same economy, or something! But, sure, it’s safer and more predictable, because you can always tax. Period. And anyone who says anything else is using that pseudo scientific economics voodoo. Sounds like an escuse for being stupid while feeling smart.

                    3. MarkinLA:

                      The economy doesn’t scare me at all since I stopped working a long time ago.

                      And now, the truth comes out.

                      So, how long have you been a retiree, MarkinLA? I mean, you’re not working, so I assume you don’t have much payroll taxes. Do you draw SS?

                      So, when you said that you pay for grandma and grandad and your parents, you really mean past tense, don’t you? I mean, it sounds like you’re done paying for grandma and grandad, who are probably dead, and, since you stopped working, you’re not paying for your parents, either.

                      So, now, the good years begin, right? Now, SS is just sending money your way from hard working younger people.

                      So, when you said:

                      SS was never about you it was always about one generation taking care of another. Don’t like it, tough shit.

                      What you really mean is, now it’s time for me to get mine. And if you don’t like it, tough shit.

                      Gee, you’re such a compassionate giver, MarkinLA. No wonder SS seems like such a risk-free proposition to you: you’re not taking any of the risk. It’s just a wealth transfer from other people to you now. And, since it’s been a while, you probably paid a lower % in taxes for the privilege, relative to the working stiffs supporting you.

                      Wouldn’t the most giving thing you could do would be to not draw on SS? You know, give something to those poor working people? Oh, wait! You’re not that giving!

                      Go ahead and feel entitled and wise, if it makes you feel better.

                    4. I stopped working 4 years ago and have 4 more years to collect early SS. So I have done quite well but do know what it takes to make money in the markets and I am well aware that the average person has no ability to do as well.

                      You should actually read your proof read pasts they are incoherent rants with little in the way of useful information. A good writer boils things down.

                    5. Just because you don’t understand something, doesn’t make it incoherent.

                      I can boil it down for you:

                      SS sucks. Alternatives would be better, including giving people who know how to invest more control over their own money.

                      Now, if you’d like an explanation for why I say that, please see previous posts, if you’re not too obtuse for that.

                  2. I can’t help it if your thinking is so limited you can’t see things from any other perspective but your sphincter.

                    SS is collecting dividends from every business whether publicly traded or not just like a mutual fund does. If you can’t see that then I can’t help you. it then distributes it to the shareholders who are the recipients of the SS check.

                    1. You’re like a person explaining that poop is the same as chocolate because they’re both brown and soft, and anyone who can’t see it just doesn’t have the vision you do. While that’s certainly an interesting perspective, I wouldn’t go around accusing people who don’t see it your way as being unable to get past their sphincters.

                      Here are the fundamental differences between SS and a real estate trust fund:

                      1. People are free to choose whether they participate in a fund
                      2. People can buy or sell their shares in a fund
                      3. People in a fund earn income proportional to their ownership, with no age, income, or disability restrictions
                      4. People in a fund earn income generated by the asset, or in buying and selling the asset. They don’t loan the money to the management and then paying the old investors with the new investors money, with the management being able to change all of the terms at will

                      Other than that, though, yeah, SS is just like a private asset fund. And poop is just like chocolate.

      2. No, it won’t, you see to imbeciles like Tony money = wealth, and since money is made by the government then all the government needs to do is make more. What confounds morons like Tony is how, respite governments best efforts to confiscate or destroy it, some of it eventually ends up with productive people.

        1. Are we at the point where we’re not even pretending anymore that “productive” means anything more than “having wealth”? I agree, it takes some effort to buy politicians and effect the engineering of the economy to funnel wealth to yourself, though traditional definitions of productive might not include “stealing everyone’s wealth and doing nothing actually productive.”

          1. This response, if that’s what you call it, has even less reason and logic than most of your other ideologically fueled ravings. You ok, Tony? Holidays got you down? Take a page from Teh Weigel and get some medication.

          2. Fucktard, don’t you see how “stealing everyone’s wealth and doing nothing actually productive” describes SS pretty much to a t?

            Fucktard claims the guys who want government out of the economy and out of our lives are the ones who funnel money magically to the wealthy through corruption.

            Fucktard doesn’t think giving government more power over our lives and the economy breeds corruption and funnels money to the rich cronies of the politicians.

          3. Right. And taxes aren’t theft because their legal. But legal capital investment is kleptocracy. And legal wages are slavery, even though slavery is illegal.

            Got it.

            1. And legal volunteering for your favorite progressive social cause or socialist city councilor of course isnt slavery.

              1. Apparently, it isn’t work, either. Otherwise, they’d have to get minimum wage.

                But, then they’d be working for slave wages. Even though slavery is illegal.

                Shrug. I give up. Forget it, it’s Tony town.

    3. your stupid kleptocratic ideology

      Oh, this is hilarious. When the government takes from me, it’s not theft, it’s “social responsibility.” When I want to keep more of my own goddamn money, it’s being selfish and taking away from the less fortunate.

      Fuck off, slaver.

    4. Tony:
      “kleptocratic ideology being proved right.”

      It’s not stealing if it’s legal, right?

      1. Technically we call it coercion.

  14. This is one of those times when the broke clock that is Tony is essentially correct. Social Security is enormously popular and will not be eliminated. Libertarian’s discussing Social Security and it’s shortfalls are a good thing. Libertarian columnists creating headlines like “We must kill Social Security in order to save retirement.” are just feeding into the popular meme that Libertarians are ideological nut jobs. Sorry that’s harsh, but some times the truth is.

    Furthermore, even though SS is in financial trouble, the fixes aren’t particularly hard. The fundamental problem is the ratio of workers to recipients and the fundamental cause is a longer life span.

    To fix the system, raise the retirement age. It’s currently 67 (for those born after 1960), gradually raise it to 72 at the same rate it was raised to 67.

    Also, reduce the eligible recipients of SS Disability. The requirements were greatly reduced between 1980 and 2000, resulting in a much larger percentage of claimants. Set them back to pre-1970 levels, so that the average claims per year as a percentage workers is at the average level between 1945 and 1980.

    There, it’s fixed, can we go onto a hard problem now. 😉

    All kidding aside, the above will probably be the eventual fix. It will just take another some odd years and a funding crisis to trigger it. And it will be worse than if we bit the bullet and did it now.

    1. The fixes may not be particularly hard on a mathematical basis, but on a political basis might be a bit harder.

      1. “Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.” – Milton Friedman

        1. You are more optimistic than I about reforming SS. I think there will be too many people screaming about ‘broken government promises’ to allow a logic based, long-term solution.

          1. Some actual solutions to SS that don’t just delay the inevitable:

            Infinite population increases.

            Population control once our robot slaves can feed us all and take care of our elderly.

            Get rid of it slowly and force people to invest in retirement accounts.

            1. “Get rid of it slowly and force people to invest in retirement accounts.”

              Which is sort of viable, but even in the Chile model, they have a basic governmental safety net that acts as a minimum floor. I think any US solution will inevitably have such a floor.

              I liked George Bush’s idea of a personal SS account, though it didn’t go far enough. But I think any realistic scenario is going to involve a combination of a fixed basic amount going into a socialistic pool, and then an additional amount going into a personal, private account.

              1. Bush’s idea was every bit as stupid as CATO’s.

                CATO would return the workers 6.2% SS tax for private investment. How would they pay for that? Well two explanations (laughing)

                1) They’d use the remaining 6.2% to help offset the “lost” 6.2%. Yes, precisely that fucking stupid!

                2) “Transition costs are only a one-time event!” (a one-time event that lasts over 30 years and starts at a half-trillion per year.)

                Face it. Team Lib is as fucking brainwashed as Team Red and Team Blue. All to extract money from us.

    2. And talking about eliminating social security while ignoring what the Fed is doing to anyone who bothers to save is pretty fucking insulting when you think about it. The reaction of the typical American to this article is rightly to tell DeRugy to go fuck herself and move back to France. How fucking dare she complain about Americans not saving because they have it too easy with Social Security.

    3. If the retirement age is increased to 72, won’t that just help fuel more unemployment for young workers?

      1. “If the retirement age is increased to 72, won’t that just help fuel more unemployment for young workers?”

        By that logic dropping the retirement age to 60 should eliminate unemployment, right? Accept that it’s been attempted before, most recently by France. And unemployment didn’t go down.

  15. If you really want to screw a good portion of savers, eliminate the income tax and institute a consumption tax in one fell swoop. Then everyone who saved appropriately for retirement will get to pay twice. If we want a consumption tax in place of an income tax, it should be phased in gradually.

    1. Eh, it would only affect people with ROTH accounts.

      You still pay income tax on what you take out of your other retirement accounts.

      1. To Paul W: not all retirement savings are in tax-advantaged retirements accounts.

    2. If we want a consumption tax in place of an income tax, it should be phased in gradually.

      Umm, since the rich subsidize fully half of the entire middle-class income tax burden … a flat tax on either income or consumption would OBVIOUSLY create a massive tax increases on the middle class. duh.

      Do you realize how stupid we look to Americans, claiming the rich pay a disproportionate high percent of income taxes … AND we can have a flat consumption or income tax?

  16. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.jobsfish.com

  17. SS is not broken and it’s not going away. At best they will come up with some sort of combined plan where the worker can have a small amount added to their SS as a semi-pension/IRA.

    SS is perhaps the most successful program in our history. It’s an extremely conservative program and perhaps should be made more so. I don’t support increasing the ss tax or the amt of wages subject to it – rather keep it as “security”, not pension.

    The sad reality is that most people are not going to save for the following reasons…

    1. Real wages (median) are down quite a bit since 1999. There is simply no extra for a large % of the population.

    2. Our breed of capitalism thrives on marketing, time payments and selling people stuff they don’t need…using fear and other reasoning. Having people “save” would destroy the current commercial economy.

    3. With the average net worth of hispanic and black families at under 10K, this is 30% or more of the population – even before you get started with other general poverty and low wages – that don’t have a pot to piss in.

    Americans don’t save for their retirement because they are basically immature. Like children, they cannot delay gratification – and like bad parents, our culture, corporations and governments want to see them spend spend spend so offer them unlimited candy and ice cream.

    1. Your argument is so persuasive and unassailable, and I’m not smart enough to come up with a reply, because of my silly libertarian ideology. So, I’m just going ad hominem:

      Shy the fuck up, you dumb ass. You’re a fucking idiot, who keeps trying to explain the world to everyone, like some grandpa fantasy. Your babbling old man wisdom is completely incoherent and contradictory. Please go have sex with an old woman, rather than explain to us what’s wrong with all the whippersnappers while you wait for your meds to kick in.

    2. Craig- employees at SSA HQ in Woodlawn, MD regularly viewed porn at work on “company” computers on “company” time. When their manager brought it up tp higher-ups, he was forced out. Sounds like a success to me.

    3. Hey ASSHOLE! Happy to see more lies from a dim-bulb lefty:

      “SS is perhaps the most successful program in our history.”

      Successful at what, ASSHOLE?

  18. Veronique needs to worry about the optics of her articles. I think the high level bits of her article are that people haven’t saved for retirement and the Veronique is advocating the one of the only things they would have to support themselves (Social Security) should be taken away. First of all the title of the article is correct. I read somewhere that the bottom 50% of America has a net worth of 20k. That means very few people are ready for retirement financially. That Fidelity study is completely wrong. But as advice to Veronique, we are fighting for free market reforms and optics matter. Write one article about a low savings rate and another article about changes to Social Security. But an article like this is going to have 80% of America howling.

  19. I seem to remember a few years ago that SS contributions are now a net negative. You are guaranteed to loose money by “contributing” to “investment” in SS. Id rather have the chance of gaining than the guarantee of losing.

  20. Too many of these “studies” don’t include pension fund assets of nearly $25 TRILLION, more than the entire value of the NYSE.

    And with interest rates artificially depressed by the Fed, this is what has been driving the stock market. That means retirement savings/investments are not depressed as much as some would imply. Those investments now earn greater returns from equities.

  21. First of all the title of the article is correct. I read somewhere that the bottom 50% of America has a net worth of 20k. That means very few people are ready for retirement financially

    THOSE retirees get Medicaid (with Social Security), Food Stamps and subsidized housing — so Veronique again has no idea what she’s talking about. Indeed, all the pissing about recent Food Stamp expansion never includes how much of that growth is traced to inadequate retirement.

    This is why we keep losing. Our own “experts” are as clueless as the collectivists.

  22. Nothing saved because 12.4% of their paycheck goes to SS. SS is tax and spend program, zero savings, zero ownership rights to the money. Sad what a horrible lie was sold to the American people by FDR.

Please to post comments

Comments are closed.