How is SS not a time bomb? In Australia you are required to deposit your retirement money in a super acct. But that acct is yours. It earns interest like an ordinary investment.
In the US you give it to the government as part of your tax and the government spends it on wars in Iraq, interest payments to China, and tax cuts for the rich. When it comes time to collect ... good luck with that.
I certainly agree there are many more issues (healthcare!).
I'd suggest Sydney->NY is not nearly the culture shock that Sydney->almost-anywhere-else in the US would be. I think whoever said Sydney is to LA as Melbourne is to NY was from Melbourne. (Although they do share awful weather in common.)
SS is not a time bomb because we have a rather convoluted accounting scheme for the government. Let me explain by analogy.
Essentially, imagine you have a kid. You start socking away money for your children's college, call this the "college trust fund", which has future obligations of $200k. You also have your "general fund", which pays for food, daily expenses, etc.
Now your kid says "daddy, I want an X-Box." You point out that you can't afford it, but to make her happy, you take money out of her college fund. But she makes you put IOU's into the college fund, and you declare the college fund has no problem. You keep doing this, until the college fund is full of mostly IOUs.
You also have a younger kid, but he's too young to talk or pay attention to the management of your finances.
Eventually, the younger kid gets old enough to talk, and he starts to wonder. "How can we pay for college for me and my sister?" He looks at the price of having a roof over his head + the cost of college, compares it to income, and gets scared. Something has to give, and he describes his big sister's college fund as a "time bomb" that will ruin the family finances.
But his sister says: "Hey, there is no problem with my college fund. It's covered - look, the account is full of IOUs from daddy. Stop being such a jerk, trying to prevent me from going to college."
Not that I disagree about SS being a time bomb, but I think you're slightly mistaken about where SS revenue comes from (or I could be mistaken; anybody out there who knows for sure should please correct me). What most Americans think of as "federal tax" is actually several separate taxes, and which ones any given individual actually pays varies depending on their employment situation.
There's a specific tax that workers (either self-employed or otherwise) pay that goes to social security (as opposed to the general federal income tax), and as far as I know, those specific funds go to the central social security trust fund rather than the federal government's general fund. Funds used for invading other countries, paying off interest payments, etc. etc. comes from other revenue streams.
As I understand it, the reason SS is potentially in trouble is that, the baby boomers are beginning to retire and draw on the system. This represents a simultaneous large decrease in the number of people paying into the fund and increase in the number of people extracting money from the fund. The precise financial implications of this seem to be up for debate- some people say that there will be sufficient money to cover everybody, while others say that there won't be.
I personally don't see how it can possibly work, but I'm certainly not an economist so what do I know? At any rate, I don't expect to see a dime of it when my time comes. At this point, I view the whole thing as basically a charity for baby boomers, and from that perspective it kind of makes sense- unless we want to let them die/starve in the streets, we're going to end up paying for them one way or another; we may as well make use of the existing infrastructure for helping to support elders.
Again I could be mistaken and would really appreciate correction from someone who knows better by I am much more cynical about the SS trust fund.
As far as I can tell the really scary thing is that that "trust fund" has been largely "invested" in treasury bonds. That is the source of the massive "intragovernmental holdings" portion of the national debt. i.e. the excess income from SS tax has actually been spent on other government needs.
http://www.dailyfinance.com/story/retirement/social-security...
Fair enough, but if those treasury bonds don't end up being worth what they're supposed to to be worth, it seems to me that we've got bigger problems than SS going under.
However, I heartily agree with your request for correction by someone who knows better- this is about the full extent of my knowledge on the subject, and I'd love to hear from somebody with expertise in this field.
"Social Security taxes are paid into the Social Security Trust Fund maintained by the U.S. Treasury. Current year expenses are paid from current Social Security tax revenues. When revenues exceed expenditures, as they have in most years, the excess is invested in special series, non-marketable U.S. Government bonds, thus the Social Security Trust Fund indirectly finances the federal government's general purpose deficit spending."
In fact this is the first year that SS has to get payments from the general fund ~50 Billion IIRC. As more and more of our taxes go to entitlements either 1. taxes will need to raise or 2. benefits will be reduced or 3. government services will be reduced
In the US you give it to the government as part of your tax and the government spends it on wars in Iraq, interest payments to China, and tax cuts for the rich. When it comes time to collect ... good luck with that.
I certainly agree there are many more issues (healthcare!).
I'd suggest Sydney->NY is not nearly the culture shock that Sydney->almost-anywhere-else in the US would be. I think whoever said Sydney is to LA as Melbourne is to NY was from Melbourne. (Although they do share awful weather in common.)