First of all I'd like to thank KMA-628 and guy44 for the detailed explainations of SS funding even though a lot of it is over my head.
One of the things I don't quite understand is the concept of the trust fund. If I save $100 a month for a new car and I add it to my checking account for 10 years, I will have a nice sum saved up. But if I spend it on other things and loan myself the car money to be payed back to myself plus interest, aren't I just fooling myself? I mean, what's the point? After 10 years when I go to buy the car I won't have the money to pay myself back. I'll have to take out a loan or get a raise in order to handle the future car payments. The $100 a month I have been putting away is just gone, there is no fund except in my head.
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Originally Posted by guy44
My point here was actually to mention that the crisis forecasted by people such as Luskin is, in the end, an 80% payout rate of Social Security. SS will NOT stop paying benefits - instead, it will at worst payout 80%. But in real terms, by the time we get to the point where SS starts paying 80% of benefits, in 2042, that 80% will be worth more to recipients than 100% of benefits do to recipients today. So the worst case scenario - even Luskin says that this is where SS is headed, and I don't disagree - is that recipients lose about 20% of their benefits but are still better off than recipients today who get all of their benefits.
Which is why I don't believe there is a crisis.
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2042 is 37 years from now. Isn't this like saying that 80% of 2005 SS money is as good as 100% of 1968 SS money? Are we to assume that the polititians will not mess with the program in the next 37 years as much as they did in the previous 37 years? Will one worker be able to support one SS reciprient?