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Comment by toomuchtodo | Hacker News Reader

This problem is unsolvable, because we don't want to solve it. Social Security is under attack, while keeping 23 million people out of poverty and being one of the most efficient value transfer and benefits system in the world. We don't want to raise taxes to improve funding for it. Wall Street is chomping at the bit to get access to worker retirement funds. Pensions are unpalatable, even though they could be accomplished with Australia's superannuation model, and are necessary for workers to get investment cashflow to obtain exposure and fiduciary management of the investments.

The wheels will keep coming off the cart.

https://www.gao.gov/financial-security-older-americans

https://www.visualcapitalist.com/a-visual-breakdown-of-who-o...

https://en.wikipedia.org/wiki/Superannuation_in_Australia

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It's not only social security though.

Broadly, wages are too low relative to living expenses, so people can't save on their own.

There's probably an argument that social security actually subsidizes low wages, as is often made with Medicaid. That isn't to say that we shouldn't have social security -- it's that it should be funded by corporate profits, shareholder returns, and executive pay.

in the USA, most expenses related to raising a family got increasingly expensive, probably because aggressive business models saw that those are "essential" so people will have to pay. That is the logic that got us to plus-fifty percent of household income going to rent and food here in California. The investors in rental units are making a fortune. It is uncontrolled predatory capitalism playing out.

The only reason we are in this situation is extreme wealth inequality. And the only way to fix it is to tax the wealthy appropriately.

We are currently taxing the young when they already are struggling on every front as compared to the previous generations. This problem will only get worse.

What a just society would do would be to add taxes to the wealthy and raise income for the poor, slowly and gently transferring wealth from the rich to the poor in a way that doesn't destroy the system.

The fact that not only are we not doing that but that we are violently opposed to doing that is a fair weather barometer of our current justice quotient.

Should we really be taxing young people more when those young people are not propagating due to high housing costs, etc?

Social Security only applies to the first ~$176k of your income (inflation adjusted annually). What percentage of young people are at that income level? This is not young vs old, but the median vs the very wealthy.

https://www.ssa.gov/benefits/retirement/planner/maxtax.html

> Social Security only applies to the first ~$176k of your income. What percentage of young people are at that income level

I think they’re saying most young people make less than $176k.

No, but that's the whole point of progressive taxation. The old and wealthy who voted us into this mess should be the ones to pay for the solution.

We should directly address high housing costs by allowing housing to be built.

17-20% fewer construction workers: Great Recession's lasting scar on housing - https://news.ycombinator.com/item?id=43269017

Insurance and Taxes Now Cost More Than Mortgages for Many Homeowners - https://news.ycombinator.com/item?id=42499267

It's the land, stupid: How the homebuilder cartel drives high housing prices - https://news.ycombinator.com/item?id=41259229

Like retirement savings, there is no will to directly address this problem.

Intentional or not, this is a bad misdirection. Young people do not have enough income to tax. Those making half a million or more can bear a sharp increase in their tax burden.

> Wall Street is chomping at the bit to get access to worker retirement funds.

What do you mean by this? My 401k is.... publicly traded stocks? What am I missing?

Private equity. Only ~4300 US companies are public, so money managers want to juice management fees by expanding accessibility into alternative asset classes.

Private equity to lobby Trump for access to savers’ retirement funds - https://www.ft.com/content/dddd1752-789a-40b6-9aa8-d7cf6f408... | https://archive.today/HrDgt

The stock market is shrinking and Jamie Dimon is worried - https://www.cnn.com/2024/04/09/investing/premarket-stocks-tr...

Shrinking public markets mean growth in private markets - https://fsinvestments.com/fs-insights/chart-of-the-week-2024...

Interesting fact: As of the end of 2024, the Magnificent Seven stocks made up 35.4% of the S&P 500's value.

I remember when "privatizing social security" was considered a horrifying prospect under the W Bush administration and became unpopular very quickly. I'm not so optimistic this time around.

He's talking about social security revenue. Obviously, the government is much better at this than your 401k plan even though they pissed away decades of surpluses by buying treasuries with them that would require the government to massively increase future taxes to ever be able to pay those back (let alone with interest). Instead, he would prefer, I suspect, that social security withholdings be increased, taxes increased, all so that 23 million people can continue to receive poverty-level checks of $1950 a month, though you won't be allowed to collect yours until you're 70 or older.

Social security doesn't work though, unless there are a dozen workers paying into it for every retiree, and no one's having enough children for that to ever be the case again.

    > and no one's having enough children for that to ever be the case again.

Immigration, increase the threshold, means tested distributions, lots of ways to solve this.

Generally, most pro-social-security people say that all of those are not necessary, not just some.

However, take a look at your first item. How are these immigrants going to pay into social-security exactly, when there isn't a large jobs base to be had? Part of the de-industrialization that the United States underwent was predicated on the notion that if our population was going to shrink anyway, we didn't need that. Now with all those jobs gone and famously "never coming back", bringing in more immigrants to short up a defunct pyramid scheme seems sort of silly.

And as for your second item, where you say "just pay more in" doesn't much jibe with "means tested distribution" where if the government deems you too rich to need it, you don't get it. It really is just welfare at that point, and not a mandatory retirement program we'll all enrolled in. No one has time for that nonsense. Do you have any faith that when the next Trump is in office (which surely will be the case in a few decades, if not much sooner), that you will make the cut for "means tested distributions"? How is that any different than just cutting social security from everyone, if it were to become policy?

OP is talking about Social Security, not your 401(k).

> We don't want to raise taxes to improve funding for it

Key word: “for it.” We’re apparently fine raising taxes if we just call them tariffs.

> We’re apparently fine raising taxes if we just call them tariffs.

Of course, because the current tariff strategy is intended to be a regressive sales tax targeting the broad populace who is already being extracted from, to avoid income tax increases.

Edit: It's also about control it appears.

Trump Press Sec Accidentally Blurts Out Real Goal of His Tariff Scam - https://newrepublic.com/article/192391/trump-press-sec-accid...

> Then press secretary Karoline Leavitt told reporters directly that if Canada wants to avoid tariffs in the future, it should become the fifty-first U.S. state. She revealed it: Trump’s tariffs aren’t about fentanyl or any supposed unfair treatment of the U.S. They’re about forcing Canada, with no justification whatsoever, to submit to his will.

https://bsky.app/profile/atrupar.com/post/3ljnnnf5hvh23

"Pensions are unpalatable". You don't have pensions in the USA? Meaning like an account into which you can put pretax money and in exchange you can't take it out until later in your life (but can invest it)?

A "pension" means an employer-funded pool of money that pays out fixed payments after a certain age. What you're describing exists (somewhat unevenly) in the US, but it's employee funded. The employee must take active steps to contribute, which means they lose part of their income until they retire and there may or may not be employer contributions. People who can't afford to contribute, or put it off for a few years (most people) end up with insufficient funds at retirement, which becomes a social problem.

Those aren't, and never were, pensions. Few pension programs exist anymore, they were (almost) all replaced with retirement accounts starting I don't even know when, but finishing by the mid 1980s. The pension programs were all going bankrupt due to various reasons (bad economy, American industrial collapse, etc) but mostly demographic implosion.

Pensions are still common with government jobs.

> The pension programs were all going bankrupt due to various reasons

And my state is having this problem right now.

We have tax advantaged retirement accounts, which have weird contribution rules that assumed companies would replace spending they were doing on pensions with contributions to these accounts (spoiler alert: didn't happen) that keep contributions limited to pretty low levels unless your employer kicks in huge amounts, which almost none do (that is, there are limits on what you can contribute, and separate limits on what your employer can contribute, and the latter is significantly higher). Also some of them require your employer to have such a program, or else you can't participate, which further limits your max contributions if yours doesn't.

Further, since individual contributions aren't mandatory, that money is freed up for zero-sum competition over things like good schools for your kids (that is, housing in good districts) so if you don't choose "defect" and spend the money instead of saving it, your family's overall worse off than it would be if everyone had to contribute.

Also, a tax-advantaged savings/investment account isn't the same thing as a pension.

we have a concept called a 401k (and for non-profits a 403b). You contribute some % of your paycheck and your employer matches some amount of that (potentially with a vesting schedule)

The money can be invested, and then at some age (55.5 i believe?) you can access the money without being taxed. There is a maximum you can contribute per year etc etc.

I am not old enough to ever have had a pension option in my entire life, but I believe 401Ks are overall worse, because pensions come w/ some amount of guaranteed payout + someone managing the fund to ensure that happens. a 401K can go to zero, and you can forget to contribute (and most of the money is your own money anyways)

> The money can be invested, and then at some age (55.5 i believe?) you can access the money without being taxed. There is a maximum you can contribute per year etc etc.

Not quite - you're given a tax benefit (i.e., not taxed) on your contributions when you contribute them, but when you withdraw funds you pay income tax. If you withdraw before the 'retirement age' (55.5, as you say) then you pay an additional penalty.

The idea being that you would be in a higher tax bracket during your earning years, but in retirement you'd be theoretically in a lower tax bracket, therefore would get some tax savings. Additionally, since the tax savings is taken off of the 'top' of the bracket when you contribute and when you withdraw its added to the 'bottom'.

There's also Roth contributions (where you get no benefit now, but don't pay taxes on gains later when you withdraw), but not all plans offer this.

Pensions are not under your control. mostly they were good but once in a while the company you worked for, for 30 years went bankrupt and then you found out the penson was in company stock so not only were you out your job/income you also lost your retirement. In response to that we now have laws about what pensons can invest in - but that means their returns are terrible and so they are not a good roi.

more people have access to a 401k today than ever had a pension as well.

> You contribute some % of your paycheck and your employer matches some amount of that (potentially with a vesting schedule)

This is actually completely optional, many employers do not. For example mine does not do any matching or contributions

> The money can be invested, and then at some age (55.5 i believe?) you can access the money without being taxed. There is a maximum you can contribute per year etc etc.

So the tax side of this depends on if the 401k was done as Roth or traditional. Traditional IRAs are tax advantaged but not tax free. Contributions are pre-tax from the employee's paycheck. Roth on the other hand is post tax and tax free on withdrawal (assuming no penalties).

The pensions I had in mind (UK) don't have any guaranteed payout and can go to zero. We don't have to have anyone "managing" them, and I for one think that's a good thing.

We don’t have traditional defined-benefit pensions, or not outside of the public sector.

> We don’t have traditional defined-benefit pensions, or not outside of the public sector.

That's a fairly popular belief, but even now (well, as of March 2023), several decades after the general move against them, 15% of private sector workers have access to a defined-benefit pension plan.

https://www.bls.gov/opub/ted/2024/15-percent-of-private-indu...

America has been sacrificed at the altar of short-term profit.

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