RE: Response to 5/24/99 Question

[Javier Jimenez <jimenj@yahoo.com>]

>>>>> PANELIST: Kilolo Kijakazi wrote:
Social Security was designed to be a societal program not just an
individual retirement savings program.
<<<<<

I believe the initial design was purely old age pension, over the
years it has expanded to cover all other areas.  However, all of
these areas of coverage could be acquired more efficiently via the
private markets.

>>>>> PANELIST: Kilolo Kijakazi wrote:
It covers workers during their younger years and when they retire.
It provides for the spouses and children of workers in addition
to workers' parents.
<<<<<

Hardly.  If a worker should die with no children, the spouse gets
nothing.  Ooops, I forgot the $255.00 death benefit.  Disability
has to be total, and benefits don't kick in immediately.  Private
disability insurance could be purchased with better terms and
shorter waiting periods.  I, personally, carry a policy that kicks
in 90 days after becoming disable to perform my present occupation;
cost is $600/year and the benefit is $2500/month.  For $400/year,
I carry a 20 years term-life ins. policy for $300,000 benefit, that
greatly exceeds the $255.00 death benefit my wife would get from
SS.

>>>>> PANELIST: Kilolo Kijakazi wrote:
Social Security is an intergenerational compact whereby younger
workers contribute payroll taxes to pay for the benefits of the
elderly in exchange for the government's assurance that current
workers will receive benefits from the payroll taxes of future
generations.
<<<<<<

Yes, one that is made also with future generations of workers that
a) have not been born; b) are too little to realize what they are
being enrolled in; c) creates unfunded liabilities that need to be
paid by those in groups a and b.

>>>>> PANELIST: Kilolo Kijakazi wrote:
Reforms made to Social Security should ensure that the safety net,
savings and insurance components of the program are protected. But
we must remember that the retirement benefits and the survivors
and disability insurance provided by Social Security are intended
to be an income floor. Social Security was not designed to be an
complete retirement system. In addition to Social Security, personal
savings and pensions are needed to move retirees above a basic
level of income. We also must remember that Social Security may
not provide sufficient income for some workers who have low wages
and have spent a substantial amount of time out of the labor market.
In these cases, the Supplemental Security Income program can serves
as an additional safety net. Social Security should not be expected
to make up for pension benefits and savings, but it is an essential,
universal source of income that should remain a guaranteed benefit.
<<<<<

There are two guarantees in life, and SS is not one of them.  If
we were to take the argument that SS is one leg of a three-legged
stool, then saving for retirement would cost a worker in excess of
30% of their wages (assumes the 10.289% going into OASI for the
purpose of old age insurance from Walter Hart's presentation The
Red Herring of Social Security's "Non-Retirement" Benefits) equally
divided among the three legs (SS, personal savings, pension).
Today, pensions are a scarce commodity in private enterprises, so
it is up to savings to cover the other two legs.  According to
polls, GenXers are more likely to believe in UFOs than ever receiving
a SS check.  One points leads to another, if you are not saving
over 30% of your income you're headed for disaster.  Now, 30% saved
for retirement plus 12.4% into the SS rat-hole plus 2.9% into
Medicare plus anywhere between 15%-28% to income taxes plus sales
taxes plus real estate taxes puts the amount of money available
for living today at about 30% of income.  There is a limit to
everything, and 100% of income is a limit that politicians are fast
approaching, but then again there is that 30% we are supposed to
be saving.  Reality is different, savings in the US is at a
disconforting low, below 0%, so, baring any radical change in the
way we allow politician and so called experts to control our money,
our wealth, and our lives, we'll have a very rotten retirement.
Good Luck!!!