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finanzmaster
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Compulsory pension insurance for USA - check whether Uncle Sam plunders you like Vater Staat does

December 11th, 2016, 4:54 pm

Hi there,

recently I have implemented a pension calculator according to German mortality* table and compared which pension I would have got, if not contributed to the state pension system but saved by myself.
The result was very sad: the father state (Vater Staat) robs me! What it promises to pay is even less than I expect to contribute (and this is in the sense of nominal value, not present value!)

I encourage you to check whether the same is true for USA. I have implemented a calculator according to the SSA Life* Table.
By the way, in Germany one can (so far) become a contractor and avoid the robbery.

*in Germany they call it mortality table (Sterbetafel) and in USA it is life table. 
Quite a good sign for culture differences ;)
 
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Traden4Alpha
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Re: Compulsory pension insurance for USA - check whether Uncle Sam plunders you like Vater Staat does

December 11th, 2016, 5:17 pm

The US is the same way for those earning above a certain amount.

Worse, the US system (and probably the German system) are not savings schemes but are Ponzi schemes in which later investors' money is actually being used to pay-off promises to earlier investors.
 
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Cuchulainn
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Re: Compulsory pension insurance for USA - check whether Uncle Sam plunders you like Vater Staat does

December 11th, 2016, 5:43 pm

It's a gravy train and snake oil.
 
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finanzmaster
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Re: Compulsory pension insurance for USA - check whether Uncle Sam plunders you like Vater Staat does

December 11th, 2016, 5:57 pm

The US is the same way for those earning above a certain amount.

Worse, the US system (and probably the German system) are not savings schemes but are Ponzi schemes in which later investors' money is actually being used to pay-off promises to earlier investors.
In Germany, a Selbständiger/Freiberufler (Contractor/Freelancer) [still] can get off and save privately for himself. 
With some tax advantages and some legal tax tricks one can even avoid paying most of taxes on pension savings (at least as far as I understand, but I am only a "hobby lawer").
But as far as I read, in USA a contractor pays doubles of what a regular employee pays (because for employee his employer pays the same amount).
Do I understand it correctly?
 
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Traden4Alpha
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Re: Compulsory pension insurance for USA - check whether Uncle Sam plunders you like Vater Staat does

December 11th, 2016, 6:05 pm

Yes, self-employed people in the US pay both the employee and employer taxes. Of course, one could argue that the employee also pays "double" too but it's hidden from them. If the employer's business can afford to pay X to an employee, the salary offered to the employee is X*(1-t) and their take home pay is X*(1-2*t) where t is the social security tax rate.
 
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ppauper
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Re: Compulsory pension insurance for USA - check whether Uncle Sam plunders you like Vater Staat does

December 12th, 2016, 7:13 am

t4a is correct, social security is naught but a ponzi scheme.
People have been saying this since the creation of social security under fdr.
Even those who defend america's national ponzi scheme can do no better than "social security is not a ponzi scheme because it's run by the government," meaning it's ok to run a ponzi scheme if you also own a printing press.
If anyone ran a company pension fund the way social security is run, they'd end up in prison.

I believe in the 2012 election debates, governor perry called a spade a spade, and socialist mitt romney took him to task for it

google tells me that the German state pension scheme is also "pay as you go," which is a term used to describe a ponzi scheme run by a government.
the german system predates the US one and was originated by bismarck I believe
 
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Cuchulainn
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Re: Compulsory pension insurance for USA - check whether Uncle Sam plunders you like Vater Staat does

December 12th, 2016, 9:46 am

The pension gap

1. UK
2. Ireland
3. Germany

http://www.rte.ie/news/business/2016/09 ... ns-report/

Here in NL the law has been changed regarding pensions in the last year to reflect the new realities.
 
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Traden4Alpha
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Re: Compulsory pension insurance for USA - check whether Uncle Sam plunders you like Vater Staat does

December 12th, 2016, 1:09 pm

Ponzi schemes can be stable under non-increasing pay-outs (non-increasing longevity) and non-decreasing pay-ins (non-decreasing population). That's a problem in some of the developed countries.

(As much as some politicians hate immigration, it may be required to save their pension systems.)
 
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Cuchulainn
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Re: Compulsory pension insurance for USA - check whether Uncle Sam plunders you like Vater Staat does

December 12th, 2016, 3:05 pm

Ponzi schemes can be stable under non-increasing pay-outs (non-increasing longevity) and non-decreasing pay-ins (non-decreasing population).  That's a problem in some of the developed countries.

(As much as some politicians hate immigration, it may be required to save their pension systems.)
Soddy contends that real wealth is subject to entropy and will rot, rust, wear out, or be consumed over time, while money and debt (as artificial accounting devices) are subject only to the laws of mathematics, not the laws of thermodynamics. As debt compounding at some rate of interest, virtual wealth will grow effortlessly over time and without limit, instead of diminishing with use as does real wealth. Soddy uses actual occurring examples to demonstrate what he considers a major flaw of prevailing economic theory.[3]

Bernie Madoff was an expert of the technique.

This infinite spiral is coming to an end (the tax office cannot get 4% ROI) so governments will think of something to get the needed funds.
 
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ppauper
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Re: Compulsory pension insurance for USA - check whether Uncle Sam plunders you like Vater Staat does

December 12th, 2016, 5:40 pm

Ponzi schemes can be stable under non-increasing pay-outs (non-increasing longevity) and non-decreasing pay-ins (non-decreasing population).  That's a problem in some of the developed countries.

(As much as some politicians hate immigration, it may be required to save their pension systems.)
see buchanan, 2001, the death of the west,
wherein that point is made.
Image
 
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Traden4Alpha
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Re: Compulsory pension insurance for USA - check whether Uncle Sam plunders you like Vater Staat does

December 12th, 2016, 5:46 pm

Ponzi schemes can be stable under non-increasing pay-outs (non-increasing longevity) and non-decreasing pay-ins (non-decreasing population).  That's a problem in some of the developed countries.

(As much as some politicians hate immigration, it may be required to save their pension systems.)
Soddy contends that real wealth is subject to entropy and will rot, rust, wear out, or be consumed over time, while money and debt (as artificial accounting devices) are subject only to the laws of mathematics, not the laws of thermodynamics. As debt compounding at some rate of interest, virtual wealth will grow effortlessly over time and without limit, instead of diminishing with use as does real wealth. Soddy uses actual occurring examples to demonstrate what he considers a major flaw of prevailing economic theory.[3]

Bernie Madoff was an expert of the technique.

This infinite spiral is coming to an end (the tax office cannot get 4% ROI) so governments will think of something to get the needed funds.
Interesting!

Soddy's insights may have been true for the industrial era in which he lived and in which almost all wealth was embodied in physical objects.

But his insights don't apply to information economy phenomena such as error-correcting digital storage, Moore's Law, ubiquitous connectivity, network effects really change the nature of wealth and many wealth-generating processes. Also, the central flaw in applying thermodynamics to economics is the second law only applies to closed systems.

Does music rot, rust, wear out, or be consumed over time? Do algorithms rot, rust, wear out, or be consumed over time? Yes, specific software packages certainly do rot but the underlying algorithms continue to perform in perpetuity. When will heap sort rust away? If anything, the cheaper computation becomes, the more wealth is embodied in the algorithm because that algorithm can be used by more people in more situations more often.

That said, you are right about the tax office having some upper bound on returns.
 
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Cuchulainn
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Re: Compulsory pension insurance for USA - check whether Uncle Sam plunders you like Vater Staat does

January 10th, 2017, 9:12 pm

The fall and rise and fall

http://www.dutchnews.nl/news/archives/2 ... conomists/

Economics is indeed a dismal science.