Thinking about retirement?

[RexrothPigeon]

We are living the Chinese curse: may you live in interesting times.

Not Chinese, fyi. Probably English.

 

[PristineSound]

Any system promising social security to everyone is temporary. Some worked more or less well over generations, but still, they're not forever. Even the costly European systems. There are several, not just one, but all in deepening trouble, mainly for demographic reasons.

All of these systems that you speak of are "pay as you go" where the retirees are funded by the current workers. Many of them are in trouble, including the US' "Social Security" system (that is the actual name of the system, "Social Security."). Those PAYG that are not yet in trouble will inevitably one day be in trouble. The reason is largely because this system is a Ponzi scheme, it relies on the next generation to pay for the current generation. Because of the global trend of shrinking birthrates, this is not sustainable. The politicians who concocted this Ponzi scheme idea never in their wildest dreams thought population would someday decline, it was unfathomable for them.

The ones that are "fully funded" where retirees are funded by the savings of their own while they were working are all very sustainable. Take Singapore's Central Provident Fund as an example, it is the beacon of success and sustainability. And most importantly, fair and just.

 

[respice finem]

All of these systems that you speak of are "pay as you go" where the retirees are funded by the current workers. Many of them are in trouble, including the US' "Social Security" system (that is the actual name of the system, "Social Security."). Those PAYG that are not yet in trouble will inevitably one day be in trouble. The reason is largely because this system is a Ponzi scheme, it relies on the next generation to pay for the current generation. Because of the global trend of shrinking birthrates, this is not sustainable. The politicians who concocted this Ponzi scheme idea never in their wildest dreams thought population would someday decline, it was unfathomable for them.

The ones that are "fully funded" where retirees are funded by the savings of their own while they were working are all very sustainable. Take Singapore's Central Provident Fund as an example, it is the beacon of success and sustainability. And most importantly, fair and just.

Correct. But even this (today superior) system can (and will) fail at some time. Nothing is ever perfect, or indistructible.
Panta rhei.

And, when you are trapped in such a "Ponzi scheme", you cannot simply switch to another system, without considerable "pain".
That pain would change voting patterns and such... so I think they will ride along into the sunset, on that dead horse...

 

[PristineSound]

Correct. But even this (today superior) system can (and will) fail at some time. Nothing is ever perfect, or indistructible.
Panta rhei.

For a "fully funded" plan, if it fails, it would affect only individual plans that fail. This plan is no different than your typical investment portfolio, and all investments carry risks.

And, when you are trapped in such a "Ponzi scheme", you cannot simply switch to another system, without considerable "pain".
That pain would change voting patterns and such... so I think they will ride along into the sunset, on that dead horse...

100% agree. It is nearly impossible to convert PAYG to fully funded without significant cuts, because the math simply doesn't add up.

It's always the stupid politicians to blame.

 

[respice finem]

For a "fully funded" plan, if it fails, it would affect only individual plans that fail. This plan is no different than your typical investment portfolio, and all investments carry risks.


100% agree. It is nearly impossible to convert PAYG to fully funded without significant cuts, because the math simply doesn't add up.

It's always the stupid politicians to blame.

As a Polish satirist said (under the Commies, last century), the final stage begins, when they start to believe their own propaganda.
History repeating...

 

[PristineSound]

As a Polish satirist said (under the Commies, last century), the final stage begins, when they start to believe their own propaganda.
History repeating...

In the US, it's said as ". . .when you start to believe in your bullsh*t."

 

[Mart68]

All of these systems that you speak of are "pay as you go" where the retirees are funded by the current workers. Many of them are in trouble, including the US' "Social Security" system (that is the actual name of the system, "Social Security.").

I don't know how it works in the U.S but in UK no revenue is ringfenced, it all just goes into one pot and is spent from there. So it doesn't actually matter if National Insurance contributions don't equal the outgoing payments for social security, the money just comes from some other revenue stream to make up the shortfall.

I don't think N.I contributions alone have ever come close to covering the welfare spend in the history of the present system (1946 on).

So the system can't collapse like a Ponzi scheme eventually will. It would have to get to the point where the government could no longer borrow money at all. Of course never say never but we're a long way from that.

 

[respice finem]

It was like this in Poland, the state "borrowed" (nonexistent) money from the state-owned bank.
The result was hyperinflation and a de facto failed state. Followed by devaluation, currency change and mass emigration.
See here:

Thinking about retirement?

No, a Ponzi scheme requires a fraudulent claim of profit in a nonexistent enterprise, and the new investors funds are paid out to early investors under the guise of that profit. You may think SS is unfair, that's your prerogative of course, but it's not a Ponzi (unless you consider stuff like...

www.audiosciencereview.com

 

[PristineSound]

I don't know how it works in the U.S but in UK no revenue is ringfenced, it all just goes into one pot and is spent from there. So it doesn't actually matter if National Insurance contributions don't equal the outgoing payments for social security, the money just comes from some other revenue stream to make up the shortfall.

I don't think N.I contributions alone have ever come close to covering the welfare spend in the history of the present system (1946 on).

So the system can't collapse like a Ponzi scheme eventually will. It would have to get to the point where the government could no longer borrow money at all. Of course never say never but we're a long way from that.

This may not be a Ponzi scheme per se, but it's not self sustainable. And if you need to borrow, one can argue you are borrowing from the next generation, which takes it back to a Ponzi scheme-like. Although, I fully recognize it's not as black and white as I make it to be, there are a lot more nuance to it.

Also, don't forget, when you have to borrow, you need to service the debt, borrowing isn't free. For example, in the US in 2024, the total cost of servicing debt is $880m, roughly 3.1% of GDP.

I guess my point is, most of these government run social safety net aren't well though out and doesn't have safety mechanisms in place. For the early beneficiaries of these social safety net, it was a bargain, but for my generation and the generations after we got the shorter end of the stick.

Back to my original comment that started all of this conversation, my generation and the generations after, should plan for retirement without taking SS into account. You be a fool to count on SS for your retirement.

 

[RickS]

See this thread has left orbit to go off topic and with reported politics, is going to get a rest. This may not be an audio subforum but ASR rules still apply.