$5 billion budget boost for pensions

Charles Ramos7 said:He owns land, but it’s zoned for agriculture, so it’s basically worthless. If it were actually zoned for residential use, nobody would even need to work—we could all just retire on a federal pension 🙂 (and probably live pretty well too)

Rent seeking

"In Economist terms, rent seeking happens when a person, a group, or some massive corporation tries to pull in cash by manipulating or exploiting the political or economic landscape, instead of actually turning a profit by engaging in real trade or creating actual value.
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Andrew Booth29 said:And there isn't exactly a wealth of profound wisdom to be found here... You have two pillars, right? By letting those from the old system die out, you’re essentially just shifting the weight—increasing the share of the second pillar while shrinking the first. It's a numbers game. Give it thirty years, and maybe you'll be fine.

Exactly! In about thirty years, there won't even be a pension left to talk about—and honestly, that second pillar will probably be gone in fifteen. Everything will be just peachy until we all go straight from our desks to Arlington National Cemetery.😁

Five minutes from the fax machine to the stock exchange > a quick hop from the exchange to the office > from the office over to Los Angeles > then straight from Los Angeles to Arlington National Cemetery.

From what I’ve been able to dig up online regarding the situation in the US, there are roughly 160 million employed people compared to about 60 million retirees. Given how messy things can get—and considering we have such a "highly capable" administration in charge—I wouldn't be entirely surprised if that ratio eventually drifted toward 1:1. I guess I'm just wondering what kind of economy could actually sustain a system like that? Specifically, what would a country like the US need to do to keep this whole thing afloat without everything just collapsing one day??

Andrew Booth29 said:Just so we can put things into some actual perspective—for those of you tossing around phrases like "it's just 12 billion dollars" and whatnot—let's look at the math. Total annual net wages in the US sit somewhere around $3.5 trillion. Now, the actual amount being paid out is likely higher if you account for everything happening under the table, but I’m just trying to provide a baseline here. It’s worth considering how much income you’d actually have to extract from the population just to scrape together "only" 12 billion.

And sure, we could always print more cash, though there'll be consequences for that.

Andrew Booth29 said:Right now, pensions are costing us roughly 5 billion Euro. If you wanted to generate a 5 billion Euro annual return from an investment, your net profit—not counting the return itself—would have to exceed that amount, wouldn't it? It seems highly unlikely that anyone could run a tourism business with a net profit margin north of 5%, if they can even hit that mark at all... To justify a return of that scale, total tourism revenue in the States would need to hit somewhere around 100 billion Euro, assuming that slim 5% margin (and even then, there’d be nothing left for the investors, who still need to recoup their initial capital and actually turn a profit). Roughly speaking, we'd need about twenty to thirty million tourists flooding in every summer just to make the math work. 🤣

We could realistically slash that expenditure down to 3.5 billion Euro with a single stroke of a pen instead of the current 5 billion; it's a win-win situation.
All it takes is devaluing the dollar, making 1 Euro equal to $3.25.
Don't forget that while we have 22 billion dollars, we are short by 12 billion which we somehow have to conjure up.
The simplest way to handle this right now is through currency devaluation, and suddenly there's enough money for every category.
The pension fund hasn't failed; people have been paying into it for 20 years and the money hasn't vanished into thin air, it's all still there, it just needs to be activated.

Andrew Booth29 said:The answer is pretty straightforward: there just isn't any money for this. Funding retirement isn't free—we’re looking at an ever-growing pool of retirees while the actual workforce keeps shrinking. Is that even sustainable? I highly doubt it.
And calling it "only" $12 billion... To pull together "just" $12 billion, we’d have to levy $233 from every single worker in the US every month. That’s roughly $233 per person.

I've been hearing that "we don't have the funds" excuse my entire life; I suppose it's just the easiest thing to say.
On the flip side, it doesn't look like there's a lack of cash; it's clearly available.
If we take that logic to its extreme, everything costs money—you cost money from the moment you're born, you cost money your whole life, and eventually, you even have to pay for your own funeral.
But we shouldn't view everything strictly as an expense, otherwise we'll lose our way.
People have spent over thirty years contributing toward retirement, healthcare, unemployment benefits, social solidarity, and housing assistance—so much is deducted from a paycheck, and then there's that pesky sales tax; sometimes it feels like we're paying three times for the same things we don't even need.
Essentially, people have been putting money aside to earn a pension they won't actually receive in full because it will be significantly reduced.

Charles Ramos7 said:When they were rolling out the pension reforms, why didn't they just set up a system—at least for new hires—where you actually contribute to your own fund, similar to how life insurance works? It feels like right now, you’re just paying into a void without any real idea what you'll actually have waiting for you when you retire.😠

Well, they avoided that route because they wanted to show young people a mathematical projection of what their payout might look like after 35 years of work... essentially letting them see which specific fund would dictate their future lifestyle.
I believe the Blue Chip fund offered the highest potential payouts, while AZ offered the lowest.
The first pillar remains untouched because the government simply isn't willing to give up its slice of that massive pie.
Think of your pension as a form of long-term savings; it's much like putting money into a bank account for 30 years and seeing what the final balance looks like once you cross the finish line.

Andrew Booth29 said:And what about the people who actually put their money in, only to find the fund is empty? I believe Chile privatized their pension system—we really ought to take a closer look at how they structured that transition.

Maybe we should be asking ourselves what happens to those who never contributed to a fund but are now relying on those very resources???

Keep in mind, the fund isn't going anywhere—the government stands right behind it, and the whole thing is exceptionally well organized.

This is truly tragic 🤷

While almost every retiree in America can complain about the "size" of their pension, one gentleman from the Strawberry Patch has had his struggles compounded by pure administrative nightmare. He’s receiving a pension of just 19 cents.

His initial pension was only 13 cents (Photo: Archive/ CNN). Back in November 2003, he filed a claim with the Social Security Administration to verify his work history, only for them to credit him with a single day of labor from 1966. By June 2004, he received a decision setting his current pension at 19 cents, according to The New York Times. That tiny amount actually grew from the original 13 cents over a three-year period. His pension hit its peak when they finally calculated back pay, leaving him with a whopping 3, $15 dollars.

There have even been instances where they docked him two cents because they claimed he had been overpaid. He previously worked for an Osceola Construction firm, a Belja Sugar Refinery, a Darda Construction Service, and an investment group out of Darda. In 1970, he moved to Germany for work while his parents stayed behind in Baranja. Due to the war, they were forced to flee their home, taking all of this man's most vital documents with them. Despite that, he has managed to prove he worked nine months at Belja and eight months at the construction firm.

Andrew Booth29 said:And there isn't exactly a wealth of profound wisdom to be found here... You have two pillars, right? By letting those from the old system die out, you’re essentially just shifting the weight—increasing the share of the second pillar while shrinking the first. It's a numbers game. Give it thirty years, and maybe you'll be fine.

The reality is that your pension is actually higher if you only contribute to the first pillar rather than splitting it into percentages between two parts.
We've already seen how some people ended up getting cheated when they opted for that second pillar.

Andrew Booth29 said:Look, the issue with the economy here in the States isn't really about figuring out what to build or how to innovate—it’s more about deciding who to squeeze for a handout so nobody actually has to break a sweat. 🤣
It is pure rent-seeking,
pushed to a level that is frankly absurd.

If you take a closer look, the whole thing is basically just busywork.
And honestly, coming up with ways to secure those subsidies is a full-time job in itself—it's not easy, though I suppose there's no real need to strain oneself.😛

Steven Lopez20 said:From what I’ve been able to dig up online regarding the situation in the US, there are roughly 160 million employed people compared to about 60 million retirees. Given how messy things can get—and considering we have such a "highly capable" administration in charge—I wouldn't be entirely surprised if that ratio eventually drifted toward 1:1. I guess I'm just wondering what kind of economy could actually sustain a system like that? Specifically, what would a country like the US need to do to keep this whole thing afloat without everything just collapsing one day??

So, I guess the Americans have an aging ratio of 1.67:1—which, honestly, makes us look even worse by comparison—and their EF is predicting that in a few decades, there’ll actually be more retirees than people actually working. Just great.
[Link to GIF]

And you can see right here that over the last decade—if you look at the data—the average number of years an American retiree actually collects benefits has jumped from 14 up to 17. I guess things are shifting, maybe?
[GIF Link]

It’s honestly hilarious because the Americans do the exact same thing we do—they even stick to the same ridiculous deadlines:

So, the Department of Labor is actually floating this idea—apparently, they want to bump the retirement age to 65 for everyone, men and women alike. I guess they think we’re all just getting younger by the day? It's pretty wild to think about, honestly. Maybe they're just looking for ways to squeeze a few more years out of us before we can finally call it quits. Who knows? Just one more thing to add to the pile, I suppose.So, looks like nothing's actually changing when it comes to qualifying for retirement—you still need those same 15 years of coverage to get anything at all. They’re dragging out this transition period forever, too... I guess that means women won't even hit that 65 age mark until after 2020. Typical.

Steven Lopez20 said:From what I’ve been able to dig up online regarding the situation in the US, there are roughly 160 million employed people compared to about 60 million retirees. Given how messy things can get—and considering we have such a "highly capable" administration in charge—I wouldn't be entirely surprised if that ratio eventually drifted toward 1:1. I guess I'm just wondering what kind of economy could actually sustain a system like that? Specifically, what would a country like the US need to do to keep this whole thing afloat without everything just collapsing one day??

An economy with sustainable growth can actually feed a nation—which is something we haven't seen here. This whole thing was basically a bubble that finally popped, so I guess stagnation is the least of our worries now.
Starting this fall, expect some sort of "anti-collapse policy." It’ll probably involve cutting wages and pensions by lowering their nominal value—meaning smaller checks than before. On top of that, they’ll likely push back retirement ages to keep labor costs down during the next cycle, making output more competitive.
The theoretical alternatives, which carry their own set of risks, would be either inflation without wage hikes or currency devaluation.

We'll see what actually happens. There's a deep lack of common sense at play here...

So, what does it actually mean to be retired?

I mean, retirement should basically be treated just like social security or welfare, right?
It’s just about having enough cash so some 65-year-old can actually afford groceries, a bus pass, and their monthly bills without losing it.

Honestly, it shouldn't even matter if you were pulling in $30k or $300k during your career.
Everyone should be contributing the exact same flat amount—not a percentage, mind you!—into a pension fund. If someone was making the big bucks, they could always set aside extra for things like real estate, gold, stocks, or insurance on their own time.
It seems pretty easy to calculate a basic social minimum. I guess the poor soul who spent their whole life grinding away for minimum wage will just end up with the bare essentials to survive peacefully through their final decade.
Then you’ve got people with disabilities, which is a totally different category; the government really needs to step up and make sure they have a decent, normal life too.

And don't even get me started on those massive pensions for Congress members or the President... if they didn't stack enough cash while they were working, then I guess they shouldn't be getting a windfall after they're done.

Just pure fair play, I suppose.
🙂

The real issue with making a pension system fair and sustainable long-term is that we're dealing with a much harder nut to crack than even the big economic powerhouses in Europe. This whole crisis just highlights how broken these systems actually are. Take France, for example—they’re staring down an 80 billion Euro deficit just to cover pensions, and their economic and demographic stats are way better than ours. None of us can really expect the economy to suddenly flip for the better, nor will we see any massive pension reforms (mostly because retirees hold so much voting power). But regardless of how much people fight change, one thing is certain: future retirees are going to have it a lot worse than people do now. Pushing back retirement ages is just a band-aid fix. We don't have enough jobs as it is, and our population shrinking back to levels seen 70 years ago—combined with a terrible age structure—is just gutting our economic potential. There’s honestly only one way out if today's thirty-year-olds want a decent retirement: having at least three kids who can help you out later. The problem is, how does an average family making $2333 a month manage to have three or more children? It's a tough question, but maybe easier than expecting a couple in their 60s to survive on a pension and help from just one kid. You shouldn't expect any miracles from the government. It basically comes down to a choice: live more modestly now so you can live somewhat normally when you're old, or live better today only to end up broke in your senior years.

The birth rate crisis won't actually be solved until the entire social security and pension system goes belly up. 😬
People will finally be forced to rediscover children—and, more importantly, their actual economic function.

It sounds basic, but it’s the truth. I guess it's just hard for anyone to flip the mental switch and actually acknowledge the economic value of passing down wealth, let alone get an entire society to do it. People are incredibly hypocritical about this; they’ll claim they want kids for all these purely sentimental reasons—love, instinct, finding purpose, blah, blah, blah—but then turn around and justify not having more kids solely based on the bottom line.

And why on earth would anyone consider that a trivial point? I suspect sociologists have actually understood this for at least seventy years now—ever since the Myrdal couple first identified the root causes behind the birth rate collapse in Sweden.
Besides, science doesn't really have much patience for that kind of moral grandstanding.

Maybe it doesn't make sense to me, or maybe it's just not scientific. But people will call you ungrounded if you suggest they should have three to five kids or just settle for a monthly pension of $333. Then, they’ll turn right around and use those same excuses—diapers, daycare, school supplies—to justify why they aren't having more children. I guess people are just absurdly hypocritical. They're also clearly confused by how much religion messes with their heads; it preaches about family values one minute, then tells you thinking about material stability is wrong the next.

The truth is, most people fail to grasp a fundamental reality: their pension is always being funded by their children. The government—it’s really just a middleman here—forcibly collects that money from the next generation and takes a massive cut for itself along the way. 😬
This might be why we see such a lack of genuine interest in parenting these days. Why bother with the heavy lifting of upbringing when the system ensures the kids will eventually foot the bill for the parents' retirement through taxes? It's a cynical cycle, isn't it?
Modern sociologists tend to overlook the economic drivers behind human behavior, while economists, on the flip side, seem almost entirely blind to the sociological nuances of the economy. But let's be honest—every community formed by human beings is, at its core, an economic one.