OT: Tyler Summitt will continue to collect Pat's pension ... until he dies

[stamfordhusky]

In a way it is a classic Ponzi scheme. No money was collected to fund the payments to those who are covered. The money I contributed when I worked went to pay benefits for people who had retired decades before. I just started collecting - and I have to hope that young workers will pay for my benefits. Thus the whole system relies on "newcomers" to the system to fund the payments that are due. It differs from a classic Ponzi scheme in that the federal government is involved - but there is a danger at some point in the future that the system will collapse under its own weight. Current federal deficit using GAAP accounting, where all unfunded obligations are included, has been estimated at over $200 Trillion. The published national debt does not include federal pension obligations, accrued obligations for social security, or accrued obligations for medicare. All of those will theoretically be funded on a pay-as-you-go basis, somewhat similar to the way Madoff funded his obligations. The difference, of course, is that the federal government can just continually raise taxes or confiscate assets to fund the bankrupt programs - unless the system collapses under its own weight.

 

[JS]

OK, the thread has been verging on politics for a while and is now crossing the line.

Any more such comments will require the thread to be closed.

Am reluctant to do that, as it's become kind of an interesting off-season OT discussion if it can stay nonpartisan.

 

[RockyMTblue2]

Can I get college credits toward an actuarial degree if I read all this stuff?

 

[lne001]

Cajun, I hope you are already retired.

The reality is that the Trust Fund (as it is quaintly called), is massively underfunded versus future obligations. That is not a problem as long as incoming contributions exceed payments, as has been true its entire existence thus far.

Last projection I saw, however, said that this annual surplus ends in 2021 and outgoing payments will then exceed exceed income. Given demographic and economic changes the continuing projection is that full "guaranteed" monthly payments will thus cease in 2033, but be able to continue at 75% indefinitely. There are steps which can be taken to address this, but they will be painful (e.g. increased taxes, reduced benefits, means testing).

In summary, Social Security is probably closer to a Ponzi scheme than insurance. Sorry.

 

[Paesano]

One other step to address the problem is to create inflation. If payments into the system are increased through inflation but payments out, aren't, the system could be inflated out of trouble. Now, payments out will be occasionally be increased to account for inflation but if those increases are kept below actual inflation, you can keep the ship afloat a little longer. The problem is that our "great" economy refuses to inflate very much despite all the stimulous and the historic level and period of easy money.

 

[Atleast5char]

Read in the WSJ that some civil war widows, married early in life to aging vets are still collecting from USA>!!!!!!!

As of 6 months ago, there was only one beneficiary still alive, the daughter of one of the marriages you mention. She was receiving about $73 a month.

 

[vtcwbuff]

SS is less of a Ponzi scheme and more of a crap shoot. How much return you get on the money the government took from you depends on beating the life expectancy odds. I'm probably on the plus side, but my long term financial advisor died a couple of months ago at age 64, a couple of years from his planned retirement. Uncle Sam gets to keep all the money they took from him.

I do know that had I invested what SS took from me I would have a lot better return on my money.

 

[DaddyChoc]

The United States Social Security Administration

sign up to view your wages over the many years, interesting

 

[Kibitzer]

As a matter of possible interest (since all US taxpayers provide funding) my wife will be entitled to 55% of my military retirement pension when I die. When I retired from the service in 1973 I signed up for the survivors' benefit plan; a little bit of my military pension has been deducted monthly ever since. I guess (no research, just a supposition) that my arrangement is typical for federal employees.

 

[Kibitzer]

Yes. Thanks. I neglected to mention that -- or that I can't designate my little great granddaughter as the recipient of this largess.

 

[tomcat]

This seems perfectly normal. Relative to pay out, keep in mind that most government employees are underpaid relative to commercial world throughout their career. For every Pat Summit, there are 1000 Clerks making $28,000 per year managing key programs or systems within a city, county, or state.

The key here, as several posters have suggested, is that the kid is getting nothing more than an actuarially accurate amount. Pat decided to give up some money up front to get him some money on the other end. It's perfectly legal. My last job was with a governmental entity and if I recall correctly, I had three options for taking lesser amounts now and providing money to my spouse if I croak before she does. In our case it makes good sense to do that because she is 9 years younger than me. She is likely to outlive me, so why shouldn't I provide at least a little something for her welfare when she reaches retirement age?

As someone pointed out, government pensions can be a good deal for employees who have accepted lower salaries when compared to similar private sector jobs. Here in Arizona, I MUST give up 9-10 percent of my pay to the retirement system. My employer then matches it. What this is is a positive incentive to provide retirement benefits. If the private sector would do something like it, everyone would be better off, at least when they retire. The key is that it is not optional. It is an unfortunate fact that given a choice. many people take the money now instead of setting it aside. This system removes that action as a possibility, to the ultimate benefit of the retiree.

 

[KnightBridgeAZ]

As some may know, my wife is disabled and gets Social Security Disability.

Now, for my wife, she was covered by a private disability plan of her employer when she became ill. She gets the same combined amount (private and Social Security) that she would have gotten from her plan without the Social Security, however, they required her to apply to the Social Security Administration. Who (at least in NJ) refuses almost all applications. However, her former employer used a consulting firm who filed the appeal, and the appeal judge was basically like "why was this denied?" which is not always the outcome.

I try never to criticize benefits that folks have worked to earn, regardless of how those benefits are funded. Pat Summitt worked to earn a pension, and did something perfectly legal in naming a beneficiary. While it is true that Tyler may not be in the poor house without the funds, think of other folks, in the same pension system as Pat, that may be dependent on those funds.