So here's the thing. Social Security (SSDI) is a system you pay into. When you retire or become disabled, the amount of benefits you are eligible for is related to the amount you pay in, which is a percentage of your income. Naturally, if one earns more money over their lifetime they would have paid more into the system, and thus are getting more Social Security benefits in return.
For those who have earned very little income over their lifetime, they are eligible for benefits through the SSI program, which one does not have to pay for. However, you may not be eligible for SSI if you have too many assets (e.g. saved money, a 2nd car). The problem is that the cutoff of SSI based upon assets has not been raised since 1989. You're only allowed to have no more than $2,000 in savings, basically requiring the applicant to be completely destitute before becoming eligible. In my personal opinion, this amount needs to be drastically updated to match modern cost-of-living standards. This program is far too out-of-reach for those merely dipping their feet in poverty.
What you're describing would be the rich consuming proportionately more SS. The article is specifically describing how they consume disproportionately more SS.
The disproportion isn't in Social Security benefits consumption. The disproportion is in lifespan, and the difference in benefits consumption is a side effect thereof, because of the way Social Security is defined to work.
I'm not sure that it actually helps anything to cast it in the cart-before-horse way the article does.
Check the final figure, where payouts minus revenue for 50+ year olds is flat across quintiles. Note that even this figure omits earnings from 18-50, which will be higher from the higher quintiles.
The main problem I have with the article is that it is phrasing it as a "handout" and the payouts coming as "courtesy of the American taxpayer." In reality, they are collecting money that they put in, so the article is making sensationalist claims that aren't factual.
According to the institute’s data, a two-earner couple receiving an average wage — $44,600 per spouse in 2012 dollars — and turning 65 in 2010 would have paid $722,000 into Social Security and Medicare and can be expected to take out $966,000 in benefits. So, this couple will be paid about one-third more in benefits than they paid in taxes.
Some types of families did much better than average. A couple with only one spouse working (and receiving the same average wage) would have paid in $361,000 if they turned 65 in 2010, but can expect to get back $854,000 — more than double what they paid in. In 1980, this same 65-year-old couple would have received five times more than what they paid in, while in 1960, such a couple would have ended up with 14 times what they put in.
Such findings suggest that, even allowing for inflation and investment gains, many seniors will receive much more in benefits than what they paid in.
Its also compulsory. I can't opt out and as you noted, the returns are shrinking drastically. It also passed as a savings program regardless of the horrible bookkeeping that the government is doing to keep an crappy system afloat. In fact, they have told us for 50+ years that its perfectly sustainable while plundering the institution to live beyond our means in other areas.
As for how its used by retirees today and in the past, would anyone sell stock that is paying insane an unsustainable dividends? Would you blame the investor or the company? Even if its compulsory to buy?
You absolutely can opt out by choosing to exclude employers that are either mandated, or who have chosen despite not being mandated, to participate in SS. Or by choosing to live by some means other than wage-labor (if you make all your income from capital investments, you have successfully opted out of SS.) No one is coercing you to the contrary (well, except the coercion to wage-labor that affects most of the population under capitalism and which has not generally been eliminated in modern mixed economies; but even there there are some wage-labor options outside of the Social Security mandate.)
Opting out and not participating in a wage-base economy are absolutely NOT the same thing. Opting out implies a simple choice. This is not a choice, this is either effectively be fantastically wealthy (and live off capital investments) or be fantastically poor (and live off welfare). Since the former isn't really a choice, you get to either opt-out of FICA, or opt-in to being destitute.
> Opting out and not participating in a wage-base economy are absolutely NOT the same thing.
To the extent capitalism isn't slavery they absolutely are.
We can, of course, debate the extent to which capitalism is or isn't slavery.
Of course, again, you can still opt-out of Social Security within the wage-labor economy, it just narrows your choices of acceptable employment opportunities. [0]
I would take the other side of that bet. I don't even need to work out the exact math:
You pay me $722,000 over the next 50 years, then from years 51-??? (70? 80?) I pay you the equivalent of $966,000.
I would not have to get a very high rate of return to end up better than that. Eyeballing it, the payments from the first 10 years alone, at a return of around 4% or 5%, would cover all of my outlays at the end. That's a sweet deal.
It looks like they accounted for inflation somewhat ("...in 2012 dollars"), but even returns modestly beating inflation would turn out a much bigger winner.
The bigger problem is that the govt. is not investing that money like I would if I took the bet.
All income groups have historically collect more than they contribute in Social Security (wage-indexing of contributions to the point of retirement combined with average lifespans has driven that, though stagnant wages in the last several decades make that wage indexing less significant than it used to be.)
How? The second bar graph shows the bottom 20% consume more than the top 20% once SS contributions are removed. The poor are getting a free ride off the rich.
A "free ride" makes being poor sound desirable but that is far from the case. Even if you ignore everything else, the life-span and health differences are enough to show that you are better off being anything but poor even if you are getting a "free ride" in one way.
I think our progressive tax system (for example) strikes a lot of people as being the same - giving some people a "free ride", but what is the alternative? The money that makes many rich people rich filters up from the millions of poor and middle class people that spend 99% of their income directly on goods and services. If you own restaurant chains, stores, factories, and/or are invested in all of those things, you benefit from the spending of the rest of the nation.
It may seem counter intuitive, or maybe its just ideologically disgusting (if you believe everyone is entirely self-made that is), but a less progressive system could ultimately harm the upper class. If the lower and middle classes don't have money to spend, our economy does not do well and given that a large amount of our wealth is tied up in financial products the last thing the rich really want is for the whole system to grind to a halt.
> So here's the thing. Social Security (SSDI) is a system you pay into.
SSDI is Social Security Disability Insurance, which part of Social Security but not the same as Social Security (the main part is the Old Age and Survivors part); if you need an abbreviariation for the whole thing, I guess you could use the OASDI that typically appears on paystubs.
> When you retire or become disabled, the amount of benefits you are eligible for is related to the amount you pay in, which is a percentage of your income.
The annual benefits are calculated like that, but rich people also—as even the title of the source article here ("The Rich Are Living Longer and Taking More From Taxpayers") points out—live longer, making their total benefits higher compared to their share of contributions than looking at annual benefit calculations would suggest, and the life expectancy gap is growing, increase the relative share of benefits going to wealthier beneficiaries.
You clearly didn't read the article, the entire point of the article was that richer folks consume more benefits than those that are not, when accounting for contribution levels.
My reading of the article is that benefits are higher for wealthy, but when you account for taxes paid, they are "more even handed". Did I misinterpret something?
EDIT: I think I did misinterpret something. When you account for taxes paid, I think it is still well on the progressive side, rather than being even. May be moreso in the future, because it's pay-as-you-go.
I apologetically admit to only a fair skimming of the article (enough to get the gist of it), but at the time observed that it didn't really delve into the requirements/benefits for Social Security and how that's a factor (beyond brief mention of "income inequality" and one of the eligibility requirements). Going back and reading in full detail, I noticed that the article didn't really discuss possible solutions to the problem.
My broader point was that a lack of modernization in how benefits are earned and paid out are reducing the payouts over-time for some of the poorest recipients of these sorts of programs. Giving subsistence income to the destitute helps to a point, but doesn't go far enough to really elevate one's standard of living to one which substantially increases health and reduces stress. Someone earning only $900/month probably isn't going to pay $100 for blood work and an x-ray as often as they should.
The article ignores the fact that while the wealthy may be living longer, they also disproportionately fund social security. They may be receiving benefits for more years, but while I don't know the numbers, I would guess their ROI is much much smaller than the bottom 20% of earners.
There is certainly a very valid separate point to be made about how in the US wealth leads to longer/healthier lives and we definitely need to think about how to fix that, but putting it in terms of receiving more social security feels disingenuous to me.
No, they really don't disproportionately fund Social Security. Quite the opposite, in fact. You only pay Social Security payroll taxes on the first $127,200 of your annual income. So if you make $250k, your payroll tax rate is effectively half that of someone making 125k (numbers rounded off here, don't nitpick).
The benefits received compared to income taxed slopes downward pretty dramatically within the range of income that is subject to FICA taxation. The Primary Insurance Amount is currently 90% of the first $885/mo, 32% of the next $4451/mo, and 15% of the amount above that. So Social Security will replace most of a low-income person's income during retirement (and it's also tax free for those people) but will replace a much smaller proportion of a higher income person's income despite the latter having paid more taxes to fund SSI.
This is what people don't understand. Though the contributions may happen at a flat rate, the payouts are highly progressive. While the rich may get out more in absolute terms, on a per month basis it isn't much more and they still will have a worse ROI on SS than the poor will.
You realize the median income in the US is about $52k, right? For an entire household. The SS tax cutoff is more than double that for an individual earner. So yes, they really do disproportionately fund Social Security, even with the cap. They just don't fund it in direct proportion to total earnings.
Single income of $127,000 is 93rd percentile in the US.
Given that, sure, the top 7% or 1% or the 0.1% don't fund SS proportionately (but they also do not receive higher benefits than the people at exactly $127,000).
The article isn't really talking about the 0.1% or 1%, though, which is a tiny portion of SS payouts, but instead the top 20% or 40% (top quintiles).
Let's say you have 3 people: one who makes 50K, another 125K, and a third who makes 250K. Let's also assume SS tax of 7% on first $125K.
The first pays $3500 per year in SS tax, the second pays $8750, and the third $8750. But each one gets the same SS benefit (assuming same number of working quarters and lifespan).
You are right about tax rates, but those rates don't affect the benefit.
The article makes the point that lifespans are not equal, which tilts the SS program in the regressive direction. But (unless I misread the numbers), SS is still a progressive system overall.
That also misses the point since benefits are directly tied to lifetime contributions, not earnings. Double the cutoff and you would double someone's contributions.
The feature that does make social security progressive it's the diminishing contribution to benefit ratio a lifetime contributions increase.
The cap on social security contributions is fairly low. After $127,000 you stop contributing to the social security. That means that plenty of middle and upper middle class families are contributing exactly as much as the rich, while probably not having access to as many of the things that improve life expectancy.
This also easy to address; include capital income and not just labor income, remove the income (and benefit) caps, and add additional bend points to the benefit calculation formula. This secures the fiscal health of the program, drives it back in the direction of progressivity across the scale, and provides people who choose active personal capital management (either for a short time returning to wage labor, or permanently) but achieve merely a modest living at it the same security for retirement as those who chose wage-labor.
I would tend to agree that this seems like the simplest approach and would probably be the best bang (helping people) for the (regulatory) buck. It essentially becomes UBI for older folks.
Personally (and I realize this goes against a lot of the HN values here), I'd like to see some form of reduced benefit paid out if people are already earning income. If social security guaranteed a minimum monthly income, but didn't pay out what you were already making in other income, it would both help to maintain solvency of the program, and also encourage older folks to retire and make more room for younger people to move up in the workforce. The big problem with that approach is I imagine it would probably cost more to police than it would save, and there are likely some unforeseen consequences to the way it would encourage people to act.
> Personally (and I realize this goes against a lot of the HN values here), I'd like to see some form of reduced benefit paid out if people are already earning income.
We do that without complicating benefit calculation by way of income taxes. It might be desirable to redirect the additional income tax resulting from that policy back into the OAS trust fund rather than the general fund, though.
$127,000 individual income is 93% percentile. I don't think "plenty of middle and upper middle class families" is a good description of the top 7% of US earners.
Social security is taxed on individual income, so you shouldn't look at this like a household income figure.
> $127,000 individual income is 93% percentile. I don't think "plenty of middle and upper middle class families" is a good description of the top 7% of US earners.
If you use the traditional capitalist-economy "middle class" (the petit bourgeoisie who live primarily by applying their own labor to their own capital, rather than doing wage-labor for a capitalist or being a capitalist that rents labor rather than supplying it), I actually don't think that's unreasonable.
If you use "middle class" to mean the middle income segment of the working class, then, sure, it seems weird.
> The U.S. retirement system looks more even-handed if you include in the analysis all government benefits received and all taxes paid by Americans after age 50.
This graph shows a roughly flat benefits-less-revenue per quintile, but is still disingenuous because it ignores revenue from under age 50. Social security payouts start as early as 62 — so this only factors in 12-20 working years and ignores the first 28-32 working years. I would guess the higher quintiles at 50 also paid more in Social Security taxes during their younger working years.
I suspect a lifetime graph of benefits less revenue would show the system is still progressive, if not as progressive as it was 30 years ago.
Either way — the headline statement, "Wealthy Americans Consumer Disproportionately More Social Security," is false.
I am confused by the wording of that graph. Does it include a lifetime of contributions and a lifetime of benefits? Or 12-15 years of contributions and a lifetime of benefits?
I think it's the (less interesting) average benefit minus tax per year, not in aggregate. The latter is presumably much harder to measure. I'd be shocked if high earners with average life expectancies could expect to recoup (inflation-adjusted) their lifetime contributions, given the "bend points" of the benefits formula.
Correct. Given average life expectancies, the IRR of contributions vs. benefits of Upper-Middle and Top 20% are 2.9% and 1.7%, respectively. Given a 3.22% inflation rate, both are negative (meaning the returns don't even keep up with inflation).
I read it as "After age 50 by income group," but it is somewhat ambiguous. Maybe it uses "lifetime" to distinguish ordinary payouts from survivor benefits? I'm not sure.
I dunno, "living longer" is one of the least offensive ways someone can get disproportionately more money from taxpayers. I think the focus should be on the opioid epidemic that is shortening middle-aged people's lives.
Well, it's concerning that in the US, wealthier people live longer. Generally, when you hear someone trying to justify the extreme wealth inequality of the US (compared to most of the developed world), the response is along the lines of, "well, there's huge inequality in relative terms, but that's not important, because in absolute terms, the poor in the US are pretty well off". But if being poor in the US means you die young, then wealth inequality is pretty important in terms of quality of life!
As for how socioeconomic inequalities translate into inequities in life span, “It’s rather mysterious,” said Lisa Berkman, the director of the Center for Population and Development Studies at Harvard University. One answer is that low-income people tend to be sicker in the first place, because the neighborhoods they can afford to live in are more polluted; because they can’t afford to adopt and maintain healthy behaviors; because they can’t afford health insurance premiums, copayments, and prescription drugs.
Woolf accounts much of the disparity in death rates to what he calls “stress-related conditions.” People who aren’t secure economically are likely to experience high levels of stress, which studies have linked to shorter lifespans and a heightened risk of death from strokes, heart attacks, and other illnesses. “We’re seeing a dramatic increase in deaths from opioids, whether we’re talking about prescription painkiller or heroin, but also from suicides, liver disease, and other conditions that I personally feel come from different ways that people are coping, in an unhealthy way, with the stresses that they’re facing in their daily lives,” Woolf said, particularly since the recession. Smoking, the leading cause of preventable death, takes a particularly costly toll on low-income people.
Berkman traces at least some of the stress load on lower-income Americans to changes in the workplace. The 1920s cohort analyzed by the Brookings researchers had their greatest earnings in the 40s and 50s, a time of economic growth and greater equality across the income spectrum. While low-income people born in the 1940s entered a labor market that was less demanding physically, they may also have experienced greater insecurity as wages stagnated, and difficulty balancing work and family life as more women entered the workforce. Unlike many other peer countries with more robust family support, the United States didn’t do much to accommodate the increased challenges facing working parents, Berkman noted. “The second wave of occupational risk are sets of working conditions that are hugely stressful,” she said. “They aren’t so physically stressful, but they’re socially stressful. They’re insecure, they’re inflexible, or they have no ability to balance work and family issues. We need to rethink what occupational health and safety is.”
That's not what the article is saying. According to the table it gives, the life expectancy of the bottom 20% is still 76.1 years. That's not "young". It is significantly younger than the top 20%.
> wealth inequality is pretty important in terms of quality of life
I think it's hard to make this case just based on life expectancy; what we really need is some way of quantifying how healthy the bottom 20% are from, say, age 60 on (or even earlier), compared to the top 20%. I suspect that this would show a much larger disparity than just the life expectancy data.
> The life expectancy of the bottom 20% is still 76.1 years. That's not "young".
It's also worth considering that the lowest 20% is much more likely to encounter violent crime, and also more likely to enlist in the military. I'm sure those things play into lower life expectancy as well.
The key thing to look at here would be the variability: what is the standard deviation of life expectancy for the bottom 20%, vs. the top 20%? The factors you bring up would suggest that the SD should be significantly higher for the bottom 20%.
The story isn't so simple. Hispanics have a longer life expectancy than non-Hispanic whites in the US, despite having much lower income levels. This is known as the Hispanic Epidemiological Paradox, and a lot of research has gone into studying this: https://www.princeton.edu/main/news/archive/S46/31/53A76/
There is no benefit cap, just a progressive rate. At low lifetime contributions, you get 90% benefit compared to contribution. As you increase your contribution this moves up to marginal rates of 32 and 15%.
As long as it's still a diminishing return and includes investment income, I have no problem with that. The real issue IMO, is it's simply not diminishing enough relative to expected lifespans, and there is a huge benefit associated with being married.
In 2017, the Social Security Wage Base was $127,200 and the Social Security tax rate was 6.20% paid by the employee and 6.20% paid by the employer.[1] A person with $10,000 of gross income had $620.00 withheld as Social Security tax from his check and the employer sent an additional $620.00. A person with $130,000 of gross income in 2017 incurred Social Security tax of $7,886.40 (resulting in an effective rate of approximately 6.07% - the rate was lower because the income was more than the 2017 "wage base", see below), with $7,886.40 paid by the employer. A person who earned a million dollars in wages paid the same $7,886.40 in Social Security tax (resulting in an effective rate of approximately 0.79%), with equivalent employer matching. In the cases of the $130k and $1m earners, each paid the same amount into the social security system, and both will take the same out of the social security system.
I built a quick model to compare IRR of contributions vs. benefits using the numbers in the Bloomberg article and income distribution reports[1].
With some massive assumptions (that I can enumerate if anyone is interested), the Bottom 20% quintile gets a 6.5% IRR on lifetime benefits vs. contributions. The Top 20%, by comparison, gets a 1.7% IRR. So despite "the rich taking more", the system is still very progressive. Just, perhaps, not quite as progressive as it used to be—but certainly not "proportionate" or "disproportionate" in favor of the wealth.
To give you a sense, had a Top 20%-er turning 65 in 2016 invested his or her SS contributions over the years in a Dow Jones Index Fund, the value of their investment would be $1.1M... versus the $290k lifetime benefit they would receive from the government. (It's pretty much a wash for a Bottom 20%-er: their DJI investment would be worth $136k vs. $130k in SS Lifetime Benefits).
Oh, and for those who are thinking, "Huh, 6.5% return is pretty good", remember that's based on individual contributions alone. Your employer contributes the same amount on your behalf. Meaning that for a Top 20%-er, you and your employer are contributing more than you will see back in absolute dollars (ignoring inflation, which makes it worse—you and your employer give me $1 in 1970s dollars and I give you $0.90 in 2017 dollars).
Rich white women seem to benefit substantially at the expense of middle-income black men, specifically, too.
The racial disparity in life expectancy is bad on its own, but has a financial impact here.
(And women live longer, plus often end up with a superior amount of SS to what they've earned themselves due to spousal benefit, including survivor benefit. That is one of the overt goals of the system, though, and probably broadly supported.)
OTOH, I wonder whether the opportunity costs of paying social security taxes are disproportionately higher for the rich than for the non-rich. What I mean is if the rich, instead of paying social security taxes, were able to invest that money, are they likely to generate much greater returns than the amount of social security benefits that they end up receiving in the current system?
Was it Howard Zinn or Noam Chomsky who described these types of arguments as: "fighting over the scraps".
The point being that we are missing the bigger picture - the massive bulk of the money is going to the rich and we need to fix that problem. Then there will be plenty of money for Social Security - and it will be possible to fix it.
"THE MONEY" ≠ Wealth ≠ Income. They are separate, unique things. You need to acknowledge the differences before you can have a useful discussion.
Unless, of course, you're just mad that some people have a lot of money. In which case, you can just yell about some people having "ALL THE MONEY" and not actually work towards a solution.
Complete mis-representation of the truth. The rich pay more into the system than they cost [1] , and the non-rich cost more than they pay - which is OK as the system is designed to be that way.
This article is sensationalist click-baity crap that wants to paint a picture where the rich somehow feed off the poor.
Here's an idea- give people with a certain income the option to not pay into SS with the obvious consequence of not being able to collect. Make this option available to people at a certain age or less (maybe 40), so that those closer to retirement don't get hosed after having paid in for most of their working lives.
I would be interested in seeing how much it costs the top quintiles to stay alive that much longer than the lower quintiles. I suspect their SSDI payments aren't enough to cover the costs on average.
It's very popular, since most Americans don't have anything significant in savings for retirement.
"Eight in 10 Americans think Social Security has been good for the country, with 70 percent of young adults agreeing and almost nine in 10 senior citizens saying the same."
You could probably find people who like it among those who are receiving checks from it. I think SS is a good place to consider Chesterton's Fence: before removing something, you have to explain and understand why it's there in the first place. Incidence of senior poverty has dropped since SS was implemented. Maybe it's not so much that people like SS as that they weren't comfortable with the poverty of their elders that they saw before implementing SS.
This doesn't make social security racist. It means that there are systemic issues that disproportionately impact people based on race that need to be fixed. Disproportionate receipt of Social Security benefits is merely a symptom or indicator, not a cause.
This disparity in receipt of SS benefits has been known about by the people who run/regulate these things since its inception. I'd be shocked if they didn't know this would happen even before its inception. Can you name a single mainstream politician who has made a serious effort to correct this problem? Maybe a couple exist, but I've personally never heard it uttered by a candidate.
> This disparity in receipt of SS benefits has been known about by the people who run/regulate these things since its inception.
The "disparity" is a change from 1980; the whole article is comparing the current state to that of 1980. The charts show that the absolute surplus of benefits over contributions was highest in the lower quintile in 1980, and the surplus since then has dropped in that quintile and raised in the other four.
I'm fairly sure that at the inception of Social Security in 1935 it was not known that changes after 1980, including a growing discrepancy in rich v. poor lifespans, would drrive a greater share of social security benefits to wealthier retirees than had been the case in the past.
Note that Social Security has measure built in that mitigate the advantages of wealthy contributors that were known in the past, including benefit caps and "bend points" in the calculation of benefits from contributions, which give wealthier retirees (that is, those with higher lifetime covered income) a lower proportion of annual benefits to wage-indexing contributions.
Income isn't the racist factor here I'm talking about, but lifespan. The life expectancy differential between a black man and a white woman is a decade. It's not the amount of each individual check someone gets, it's the fact that some groups collect checks for many years longer.
Well the question you fail to ask is, are the conditions the same at inception to today? Why is every imbalance a racial issue? Is that the issue guaranteed to induce the most debate?
Are rich insert-minority-here have similar lifespans to rich-non-minority peoples? How much does location affect the outcome? Inner city poor are likely to be disproportionately affected by violence; murder where as those in rural areas might not get quick response to medical emergencies.
All that really matters is that people who get to the appropriate age are paid similar benefits. If you want to mitigate longevity then what is the option, terminate benefits after twenty years?
sorry I just find it abhorrent how some see race in every system and how it must be purposeful when declared
>Well the question you fail to ask is, are the conditions the same at inception to today?
Except for the fact that at inception nobody had spent their entire life paying into the system: yes. The demographic lifespan differentials are similar.
>Why is every imbalance a racial issue?
This is a system that, on average, redistributes money from poor black people to wealthy white/Asian people. Simple as that. The article already covers the wealth issue, but even correcting for wealth blacks/hispanics have lower lifespans than whites/Asians.
>All that really matters is that people who get to the appropriate age are paid similar benefits.
That's the WHOLE point of my argument, is what the "appropriate age" is based off of. Presumably it has something to do with ability to perform labor at various life stages.
The life expectancy differential between a white woman and a black man is over a decade. That we treat those two groups the same with regard to how we calculate their life stage is insane.
Privatizing it still doesn't address any of the systemic issues regarding ageism, classism, sexism, racism which have impacts on longevity.
This argument is fundamentally absurd. It's like saying that public schools in predominantly rich, white districts are better than schools in predominantly poor, black districts so we should get rid of all public schools because poor blacks get a poor education so it's racist.
No, we should address the problem of the schools and opportunities themselves, not eliminate it (though that may still be part of the solution). Here, with pensions, they serve a need. Eliminating them will actually hurt the poor, and minorities, more despite the discrepancies in payouts. The focus should be, why do they have worse life expectancies and what, if anything, can be done to address that. Why do they have worse savings rates so what can be done to increase their savings rates, or increase their wages so they're more able to save.
>Privatizing it still doesn't address any of the systemic issues regarding ageism, classism, sexism, racism which have impacts on longevity.
There are potentially many solutions to this problem, but privatization would be a huge step forward compared to the current system. At least with privatization you could pass on your accumulated wealth to your children, even if you didn't get to enjoy it yourself.
That certainly would be a benefit, but that changes it from a traditional pension to a retirement savings/investing account. Traditional pensions are typically not inheritable (except, potentially, by a spouse) and, also typically, offer guarantees on payout. You will get $3000/month. A retirement savings/investment account can make no such guarantees.
It's unfashionable to recognize it publicly, but there really are minor physiological differences between different races. Race is a dumb word, but people with DNA from different regions will be susceptible to different types of problems. And doctors who aren't racist at all will provide different medical care based on these things because of what tends to work best for different groups. Hell, we even know red heads need more anesthesia, and that's just a hair color, not even a race. Even correcting for income, education, and all that blacks and hispanics have a lower lifespan than whites and Asians. Additionally, women live longer than men.
I believe this point is valid, but I'm unsure how to relate it to the discussion at hand.
That said, while it's true there are differences in different genetic ethnicities and in different sexes, that we choose to downplay these currently is probably mostly for the best. Until there is much more acceptance for the idea that we're all actually much more similar than we are different, and that natural variability based on specific, non-racial genes and upbringing overwhelms most group differences, promoting the idea that we are all the same is probably the most beneficial path. The alternative is that these small differences get blown far out of proportion and are used as explanations and excused in inappropriate ways.
The difference is significant. On average a white woman out-lives a black man by 10 years. That's a lot of wealth redistribution. The SS retirement age is surely intended to correlate to something akin to stage of life, ability to perform labor, etc. There have to be better ways to do this than simply drawing a line in the sand that applies to every group. One of the many ways this could be done, and I only mention it for its relative simplicity, would be to privatize and switch to a defined contribution system rather than a defined benefit system. This has other problems, of course, but it would at least allow a person to pass on whatever they accumulated to their children, even if they didn't get to use it themselves.
> On average a white woman out-lives a black man by 10 years.
Most of the difference in life expectancy at birth is because black men are particularly likely to die as children or in young adulthood without having paid much, if anything, into Social Security.
At age 65, the difference in life expectancy between black men and white women is about 4 years, and it's about 3 years between black men and black women. And about 2 years between black men and white men. The main redistribution is that between men and women, regardless of race. There's a smaller racial redistribution effect.
> it for its relative simplicity, would be to privatize and switch to a defined contribution system rather than a defined benefit system. This has other problems, of course, but it would at least allow a person to pass on whatever they accumulated to their children, even if they didn't get to use it themselves.
It would be a far simpler change to simply make survivor benefits for dependents of a worker who dies early more generous (and on a sliding scale depending on how early they die),though if you do that without decreasing baseline benefits you need to do it at the same time as a revenue enhancement like uncapping taxed income and expanding beyond labor income (perhaps with additional bend points, though the existing bend point system may be enough that you don't need that.)
> Even correcting for income, education, and all that blacks and hispanics have a lower lifespan than whites and Asians.
Hispanics in the US (which even those who believe race is a real thing consider an ethnicity that crosses racial lines, not a race) have longer life expectancy than non-Hispanic Whites.
Thank you for the correction on hispanics and life expectancy, but it doesn't change the racist nature of the system just because one of the groups that would benefit the most might happen to be a minority.
I didn't say Asians/whites are racist. I said the SS system itself is racist because it disproportionately benefits some races over others. Arguably the legislators and voters who want to keep the same system are racist too, though I suppose the voters are just ignorant. I highly doubt the legislators are ignorant of this problem.
The obvious counter, I think, would be that Social Security, unlike the sun, is a system of human design, and susceptible to human redesign - which the sun isn't, not yet at least.
(For clarity, I'm not espousing this position, and will not defend it with any energy should it be attacked. I post it because I'm as curious what a supporter of the "Social Security is racist" claim will think of it, as I am convinced that it's the most obvious consistent response to your point.)
and I would agree that SS is not perfect, and that it CAN be improved.
I just dislike characterizing it as racist. You can absolutely argue for the betterment of SS, even on the grounds that it inadvertently affects things along racial lines, without calling it a racist system.
Would one be correct to regard as a trivial inference from your argument the statement that Social Security is also ageist, because in the aggregate it benefits older people over younger? If not, why not?
For those who have earned very little income over their lifetime, they are eligible for benefits through the SSI program, which one does not have to pay for. However, you may not be eligible for SSI if you have too many assets (e.g. saved money, a 2nd car). The problem is that the cutoff of SSI based upon assets has not been raised since 1989. You're only allowed to have no more than $2,000 in savings, basically requiring the applicant to be completely destitute before becoming eligible. In my personal opinion, this amount needs to be drastically updated to match modern cost-of-living standards. This program is far too out-of-reach for those merely dipping their feet in poverty.