Jim Burrows

Comments:

• My bad for the spelling error on the data source. Fixed in above posts.

  Post: I’m depressed, not very optimistic about retirement 😱 by R Quinn

  Link to comment from October 6, 2024

• Do you really believe that removing the cap on taxable income for SS while not using the income taxed above the cap in computing benefits would turn the program into welfare? The first problem I see with this position is your state of denial. Social Security already is a welfare program. Welfare is aid in the form of money those in need and any agency or program through which such aid is distributed. Social Security is, and always has been, nothing more than an income redistribution program. You have often made this point. The entire idea that one has paid for the benefits they receive is total nonsense. How many times have you pointed out the amazing short time period in which you received benefits that exceeded the total amount that you and your employer paid in?

  Post: Social Security Solutions

  Link to comment from October 6, 2024

• Those percentages are NOT benefits share of total compensation. They are the total employer contribution rate expressed as a percentage of covered payroll as reported by the employer in their pension plans comprehensive annual financial reports. This data is compiled by Equable and is available in their public data base that you can find here Public Retirement Research Database (equable.org) *edited to clarify data source

  Post: I’m depressed, not very optimistic about retirement 😱 by R Quinn

  Link to comment from October 5, 2024

• It is a neat tool. They include the option for removing the cap on taxable earnings with the wages above the current cap also counted in the formula that determines benefits. I'd like to see the option to remove the cap for taxes and but keep the cap for computing benefits. That should significantly increase the 60% impact on the gap.

  Post: I’m depressed, not very optimistic about retirement 😱 by R Quinn

  Link to comment from October 5, 2024

• It is true that public pensions are more generous than private plans. Many public pensions allow one to start collecting at age 55 if you have enough years of service, as opposed to 65 for most private pensions no matter how many years you worked for the company. Many public pensions also have some sort of COLA while most private pensions are fixed for life. (Would anyone consider a pension without a COLA as a "decent pension?"). These would tend to drive up their costs. Public pensions also have some big advantages over private pensions that would drive down their costs. One of the biggest is a better regulatory environment. They are not covered by ERISA and don't have to deal with PBGC. The ability to retained traditional actuarial methods to smooth their contributions over time instead of following the legislated funding requirements is a big difference. Also, some 40% of public pensions delay vesting until ten years verses the ERISA which forces most private pensions to vest by five years. Does all this mean that public pensions cost two to three times what a private pension would? I don't have any good data on private pension costs so let's say it does. In my early post I showed that employees and employers in pension plans that do not exempt them from SS pay about 30% of total payroll cost. That's 15% to 10% if Mr. Quinn is right. 

  Post: I’m depressed, not very optimistic about retirement 😱 by R Quinn

  Link to comment from October 4, 2024

• That is not correct. Here is what Equable has to say about it; It is important to keep in mind that states and cities do not uniformly participate in Social Security. Most individual government units do also enroll their employees in Social Security, but a few governments never opted into the federal program. My quick look at Equitable public data base shows about 200 public pension plans with only about 50 of them exempting their employees from SS. The cost to employees and employers for these plans is much higher. Employees in pension plans that do not exempt them from SS pay about 6% while those in plans that do exempt them pay about 8%. Employers with exempt plans pay about 43% while employer with plans that do not exempt employees from SS pay about 25%. I'm guessing that is because these non-participating locations offer larger benefits, and these require larger contribution rates. But either way, Mr. Quinn's estimate that a decent pension plan can be funded by about 8% of payroll is still less than the 30% cost of payroll for public pensions that don't exempt an employe from SS. 

  Post: I’m depressed, not very optimistic about retirement 😱 by R Quinn

  Link to comment from October 4, 2024

• The Committee for a Responsible Federal Budget as an interesting interactive tool for testing out possible SS fixes. Using this tool one sees that applying the payroll tax to Cafeteria plans would close 10% of the gap and requiring new state employees to join SS would close another 5% leaving 85% of the gap to cover. You could apply the payroll tax to all wages and close another 60%. You would also have to raise the SS tax rate by 1% to close the gap. That would be a significant tax increase.

  Post: I’m depressed, not very optimistic about retirement 😱 by R Quinn

  Link to comment from October 4, 2024

• Eight percent of payroll for a pension seems low. The average combined pension contribution rate for state and local employers is 29.82% with the typically employee paying about 7% of that and the employer the rest. These numbers are for 2022 and come from Equitable. OECD reports that the contribution rate is 18.2% in 2020 for the 35 OECD countries that have specific pension contributions. Some employers already fund defined contribution plans even if the employee does not contribute. My last employer contributed 3% even if you put in nothing and more if you did.

  Post: I’m depressed, not very optimistic about retirement 😱 by R Quinn

  Link to comment from October 4, 2024

• Setting up a TIPS ladder is a perfect task for a fee only financial advisor. Once it is set up you just spend the interest from the TIPS and the principal from the maturing bonds.

  Post: Hedging your bet in retirement-dealing with inflation. What’s your strategy? R Quinn

  Link to comment from September 29, 2024

• From January 2020 to August 2024 the seasonally adjusted CPI-U has increased 21.3%. That works out to an annual rate of 4.2% for that 56-month time period.

  Post: Hedging your bet in retirement-dealing with inflation. What’s your strategy? R Quinn

  Link to comment from September 28, 2024