This is literally how all insurance works. Everyone pays into a pool to help the individuals that need it, knowing it could be them. Ideally, government insurance doesn’t also make a profit.
Social security isn’t a piggy bank. That’s what retirement savings are for.
The last part is exactly what they want you to think. It WAS meant to be sufficient, but that would have cost someone else, so they invented the idea of people taking care of themselves with the 401K invention. Now when your SS doesn’t mean your needs, they can point and say, well, you should have saved up better.
There used to be company pensions too, but they’ve slowly eroded away as younger people entered their jobs. My job gave me the option years ago of keeping the pension going or converting it to a secondary 401k that would earn lots of money, promise. I said hell no, give me my pension.
But isn’t thay the reality now? Even though it wasn’t meant that way, it has been changed over the years. I’m genuinely curious. I’m not saying it should be that way, just that my understanding of how it works was that you can’t expect to get your deductions back.
It’s not a matter of getting back what you put in, but to be able to not worry about supporting your basic needs in the last part of life. That many have paid into the system their entire working life and it isn’t enough without some extra supplement suggests it’s not working well enough.
Honest question: how is it different from de facto insurance when you don’t get to withdraw everything you put into it, or pass it down when you die? I would like to know where my understanding of it is incorrect.
Insurance pays out a flat amount once, social security pays out constantly for the rest of your life. You absolutely can pass down any of the money you get from social security. You’re not guaranteed 100% of what you put into regular retirement accounts either, if the market crashes so does everything tied to it.
I see…I was thinking in terms of health insurance where you do get “payouts” regularly. I was unaware that you can pass down social security benefits (sorry from your spouse getting more benefits).
My understanding was you can’t take it now than X amount per month, so you can’t “take it with you”. Market fluctuation aside, my retirement savings (minus taxes) can go to my children as inheritance.
You cannot pass down social security benefits for continued withdrawal, you can pass down money you have received through social security if you have any saved up or invested when you die
Oh I see what you mean. Yes we agree on that. Anything already taken out you keep. But you can’t take out a lump sum of everything you had put in. So I think we understand that part the same way.
This is literally how all insurance works. Everyone pays into a pool to help the individuals that need it, knowing it could be them. Ideally, government insurance doesn’t also make a profit.
Social security isn’t a piggy bank. That’s what retirement savings are for.
The last part is exactly what they want you to think. It WAS meant to be sufficient, but that would have cost someone else, so they invented the idea of people taking care of themselves with the 401K invention. Now when your SS doesn’t mean your needs, they can point and say, well, you should have saved up better.
There used to be company pensions too, but they’ve slowly eroded away as younger people entered their jobs. My job gave me the option years ago of keeping the pension going or converting it to a secondary 401k that would earn lots of money, promise. I said hell no, give me my pension.
But isn’t thay the reality now? Even though it wasn’t meant that way, it has been changed over the years. I’m genuinely curious. I’m not saying it should be that way, just that my understanding of how it works was that you can’t expect to get your deductions back.
It’s not a matter of getting back what you put in, but to be able to not worry about supporting your basic needs in the last part of life. That many have paid into the system their entire working life and it isn’t enough without some extra supplement suggests it’s not working well enough.
Social security literally just is collective retirement savings
Honest question: how is it different from de facto insurance when you don’t get to withdraw everything you put into it, or pass it down when you die? I would like to know where my understanding of it is incorrect.
Insurance pays out a flat amount once, social security pays out constantly for the rest of your life. You absolutely can pass down any of the money you get from social security. You’re not guaranteed 100% of what you put into regular retirement accounts either, if the market crashes so does everything tied to it.
I see…I was thinking in terms of health insurance where you do get “payouts” regularly. I was unaware that you can pass down social security benefits (sorry from your spouse getting more benefits).
My understanding was you can’t take it now than X amount per month, so you can’t “take it with you”. Market fluctuation aside, my retirement savings (minus taxes) can go to my children as inheritance.
Thank you for the explanation.
You cannot pass down social security benefits for continued withdrawal, you can pass down money you have received through social security if you have any saved up or invested when you die
Oh I see what you mean. Yes we agree on that. Anything already taken out you keep. But you can’t take out a lump sum of everything you had put in. So I think we understand that part the same way.
Thanks for the clarification and bearing with me.
Glad to