On Dealing with the So-Called Entitlement of Social Security and Medicare...

[WCGreen]

Here's how I see it best, with numbers, because I am an accountant and that's how I explain stuff.

Let's say you worked for the last 40 years and earned a steady 50k per year.

I picked 50k because I am assuming you may have made less than 50 for 20 years and more than 50 for 20 years, so brevity and for ease of explanation, I decided to just even it out.

You would have contributed, CONTRIBUTED toward your Social Security retirement account (that's why you have a number) 128k. Your various employers would have matched that 128k so you would have about a quarter of a million dollars in your "Trust" fund account that some are now calling an entitlement.

Remember, that is not including any interest earned on your portion of the "Trust" fund.

Say you retire at 65 and live to 85. You had twenty years of payments from your part of the "Trust" fund. At 15k per year, that would be about 300k.

I do not see the problem here.

The problem is with Medicare. When they set the program up, they set the contribution for the fund at a ridiculously low rate of 1.45% from the employee and a match of the same for the employer so you, using the example above, would have $1,450 total contribution into that insurance fund per year.

Using the same scenario as above and you would have a total of 58k continued to the Medicare Insurance Fund over that same 40-year period.

That would be wiped out for one five-day stay in a hospital in today’s dollars.

Personally, I have no problem paying 5% of my wages into a Medicare Program if that would make it sound. But we all know the temptation to "raid" that fund would be too much for War Mongers and Tax Cutters to ignore.

Bottom line. Fix Medicare by making it universal and that everyone pays into the fund at least 5% of their gross income. To think that we can have good health care for 1.45% of our income is foolish.

But keep your fucking hands off the money that I invested in the Social Security "Trust" Fund. It is not an entitlement; it is the contributors’ money.


Updated for spelling and missed wors

[CaliforniaPeggy]

1. This makes a lot of sense to me.

I know why they can't see it...they want our money for their wars.

Damned politicians.

[Peacetrain]

2. Bingo!... It has been medicare, and especially the drug benefit part D

That is directly out of the budget with no taxes like payroll coming in to pay for it. The thing is immense.

I have a theory on that too. I think it was set up that way to link to SS, to try and convince people SS was a bankrupt system. I have no proof of that, but who in their right minds, (beside delusional money spending republicans) would do such a stupid thing.

[leftofcool]

3. You nailed it!

[Turbineguy]

4. It's called an "entitlement" because

Wall Street can't seem to get their grubby hands on it.

If all the money was turned over to them it would get some less pejorative name. Perhaps it would be called "benefit". Then when you retire, you find out that all the guys who invested it for you own superyachts and you don't get anything.

[leftofcool]

5. Bingo!

[NoNothing]

6. It is the contributor's money

Here's my problem: the contributors want to have their cake and eat it too. All the time they "contributed," their "contributions" were also used to pay for other government programs, meaning at least that they got goods and services that they otherwise would have had to borrow money for OR raise taxes for. So now, after having using those contributions to keep their taxes low during the time they contributed, they want to ALSO claim that now that it's time to withdraw that they are owed every penny, and oh yeah, people who are "contributing" now should have higher taxes too.

EDIT: I'm not trying to cast blame here. Certainly the vast majority of payers had no idea their contributions were being spent out the back door. But I think there should be some acknowledgment, at least, that they benefitted by that while it was going on. They need to at least realize what my generation is faced with: we need to pay for the people who have already contributed, AND pay our own contributions, AND pay higher taxes to cover the money that used to be spent out the back door of the trust fund.

[WCGreen]

7. The money is borrowed from that fund by the treasury...

It has to be borrowed from the fund. That is the heart of the investment part of the fund.

You got it wrong.

It would be just the same as investing in a mutual fund and that fund then buying goverment bonds.

[NoNothing]

9. I'm not wrong

You can't send goverment treasury instruments to social security recipients. They need cash. So to pay the benefits, the treasury has to pay back the trust fund with cash for the cash that it originally borrowed.

Well, where do you think the treasury gets cash from?

It would be like investing in a mutual fund that invests in shares of itself.

[WCGreen]

10. But that isn't how it works...

Would you rather they invest the money in the private sector.

They buy T-Bills. It's matters not to the trust fund what they do with the money once they purchase the T-Bills...

That would be the same as you as an individual buying T-Bills.

[NoNothing]

12. Of course it doesn't matter to the trust fund

But it matters a hell of a lot to the taxpayers when it comes time to cash in those T-Bills! The trust fund "assets" are exactly balanced by liabilities on the Treasury, so taking the government as a whole, the two cancel out and it actually has nothing at all. This is different than ME buying a T-Bill because then I have an asset and *someone else* has a liability. The U.S. government, on the other hand holds both the assets *and* the liabilities, meaning it has nothing! What it would be like is me writing myself an IOU for five bucks. I have an IOU for 5 bucks, an asset. I also have a liability for 5 bucks, to cover the IOU. Net result? I have nothing at all.

[kestrel91316]

8. I have been paying into SS and Med for 37 years. I look at it as

repayment of a debt, with interest.

[nashville_brook]

11. oh HELL yeah.

f'n a.

[DURHAM D]

13. Just a couple of comments:

The boomers start turning 65 in January of 2011. At that time all they get is the hospitalization part of medicare (Part A). To get Part B (doctor visits and tests) they have to buy it. The rate for Part B is based on your income when you were 63. Right now the pre-boomers that are turning 65 are required to pay in at a rate of $110 per month or $1,320 per year if your income was less than $85,000. If your income at 63 was over $85,000 you will be paying $154 a month. If your income was over $107,000 at 63 you will be paying $220.00 a month - the next break is at $160,000. That is the rate right now. I assume by January of 2011 that base number for part B will climb a lot for everyone turning or over 65. A lot of people don't realize that you must pay to receive medicare benefits for your entire life - I think they assume the payments stop once you reach 65.

Also, the Medicare coverage for both Parts A & B is 80/20 coverage. So 20% either comes directly out of your pocket or you buy a supplemental insurance policy from a private insurer for $100 - $250 per month because once you get old you know you will need medical attention. Also parts A & B both have deductibles and neither medicare (or the supplemental insurance) covers many of the things you will need. Medicare was fairly well planned - it is just that many more things are now paid out of the fund that were not planned for and have never been properly funded. For example - I assume medicaid is expensed against medicare.

So, for your $58,000 contribution over 45 years to medicare you mostly receive an opportunity at 65 to pay more money and buy more insurance.

[WCGreen]

14. Still, that's true. That was part of a short term fix.

Right now I pay about $1,150 per year for my Medicare which is just my secondary insurance since I am still covered by my wife's insurance from work.

the point I was making is that it is underfunded whereas the Social Security is not.