----- Original Message ----- From: "Erik Reuter" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <[email protected]> Sent: Wednesday, January 19, 2005 4:07 PM Subject: Re: Kotlikoff's PSS plan
> * Dan Minette ([EMAIL PROTECTED]) wrote: > > > But, we do have to remember, that even with a 25% downward step > > function in benefits paid in '45, the paid benefits at retirement will > > still be 36% more than they all now. > > But not the fair share of the people below 40. How is it fair for the > boomers to pay in 4-5% of GDP and get out more than 6%, while the next > generation pays in 5%, but only gets out 4.5%? > > > even less in payout with my suggestion than the step function. I > > don't know your salary, of course, but given your education and > > responsibilities, I'm guessing you are above the tradeoff point (which > > I calculate at about 45k/year on the present salary).** > > I'm not arguing for myself. I'm saving about 40% of my after-tax income, > so barring disability, I won't rely on Social Security to any extent. It > would be nice to get back at least a fraction of what I paid in, but > I'm not holding my breath. I wouldn't even complain loudly if the > benefits were not cut from current schedules for people over 50, even > though they are clealry getting more than their fair share. But where > I draw the line is at screwing the next generation(s) after me -- I'll > pay more than my fair share now, but I am NOT going to screw the next > generation. The system needs to be fixed NOW. There's an interesting paper (in .pdf form) at http://tinyurl.com/5jj2c which gives the payments and benefits for different age cohorts. It appears that the end of the baby boom is at a break even point. A second point worth thinking about is the longevity that is tied to the assumptions. At: http://www.ebri.org/pdfs/1199notes.pdf it appears that, between 2010 and 2050 life expectancy is expected to change from 78.5 to 80.5 years. Right now, the retirement age is 65.5, for people born from '43-54, it is 66, it then creeps up so that it is 67 for those born in '60 or later. The point of this is that somewhere around 15% of the 25% required drop in earnings if there is a no change. So, the difference appears to be more longevity than demographics. (see) http://tinyurl.com/5jj2c If you look at my first reference, you should see that there is a very significant difference between the return for the folks who retired in the '90s and the later baby boomers. That's even more pronounced if you consider the cohort from '15 to '20 (which is not given). Those folks got a lot more than they paid in....as a fraction of GDP. But, since they weathered the Great Depression and WWII, and built a United States where I could prosper, I don't begrudge them that. The fact that the baby boomers will do a bit better than Generation X (but not nearly the difference between my father's generation and mine) and Generation X will do a bit better than my 3 kid's generation, is not a matter of great guilt for me. My kid's generation should be, on the whole, wealthier and longer living than my generation. A ~10% difference in return ratios doesn't bother me; neither does the almost factor of 2 difference between my folks generation (born in '16 and '20) and mine. But, having said that, step functions aren't nice, and I have no problem with the type of change I suggested a couple of posts ago. I don't like the trial balloons that I've seen from the Bush camp, but the actual plan in February may be better than those balloons. Finally, I thought of one reason why I'd feel a bit less guilty less guilty about the next generation. I've spent a lot more money on that generation than I'll get back from SS. Tuition payments can be quite high. :-) Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
