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Double Or Nothing Social Security Betting

A terrible idea. But still...
  (+3)
(+3)
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They sort of do this already, if you retire at 62 you get X amount. wait till 67 you get twice that, wait till 70 you get 3 times that. (very roughly)

So okay, let's play. Make it to 75? double that. 80? Double it again. Have math nerds using actuary tables (whatever those are) to work the numbers out and if you're feeling really bold and long lived, go for the grand prize, a million dollars a year at say... 100.

Why? I hear that some people die after a nice round number, like they've been holding on to reach that. Maybe the winning would be those extra years of life.

And maybe most importantly, would you start taking care of your health so you might make it to those very later years? That's the thing that might make the game worthwhile.

Okay, after giving this some thought, here's the reason this might not be so stupid after all. Anybody who has kids and grandkids will tell you their life is much more important than theirs. If I could make it to 100 without Social Security so I could give my family a million bucks? Two million? Are you kidding me? I'm playing that game.

And guess who's incredibly motivated to take care of me as much as possible and keep me alive no matter what?

I'm not so sure this is such a terrible idea.

doctorremulac3, Jan 27 2023

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       [+]   

       This idea is queer, odd, and just might work if it weren't politically unfeasible. It has that undefinable seed of greatness. I wish I could give you one of my buns for an extra.
Voice, Jan 27 2023
  

       Is any social security involvement really necessary? You can easily go DIY on this no problem, Ladbrokes will be happy to give you odds i'm sure.
Skewed, Jan 27 2023
  

       Oh god! That's scary! You can already do this!!!   

       But wait, they'd need enough players to fund this though so maybe the free market version of this wouldn't work, gotta go full commie on this.   

       A little conflicted on this. On one hand, hey, it's the person's money and life, they should be able to do what they want with it, but on the other their might need to be a means test so people don't live their final years in a cardbord box behind a dumpster because they've got a gambling addiction.
doctorremulac3, Jan 27 2023
  

       //might need to be a means test so people don't live their final years in a cardbord box behind a dumpster because they've got a gambling addiction//   

       That would be silly.   

       You'll get the best odds in your early years so placing the bet in your twenties would probably work best, a single payment even, better yet your parents place the bet for you the day you're born.   

       sp. cardboard by the way.
Skewed, Jan 27 2023
  

       Missed the a.   

       Yea, this would have to be flexible though. Somebody bets on making to 100 then gets cancer, they're gonna need that money now.
doctorremulac3, Jan 27 2023
  

       So... either through social security administration, insurance company, or a betting shoppe - you're gonna place a wager that pays off more the longer you live? Seems like the bookie would prefer your early demise.   

       And you're not so sure this is such a terrible idea?
a1, Jan 27 2023
  

       //You'll get the best odds in your early years// not sure that's true if the idea is implemented as described. The way to "diy" it has to take into account the current non-gambling version of the state pension / handouts - you get your £50 week or whatever and you have to declare it all to the underwriter and pay it into your private insurance account. Then you can carry on living in your box and waiting until you are 100 so as to claim your £1000000 or whatever. The odds and pay off will be carefully calculated. And you should be able to cash in at any point by redeeming your insurance on top of whatever state pension you are due. Complex but doable.   

       Of course the flip side of this is if it ever becomes a normal thing to do (whether state run as part of the whole pensions scheme or private "DIY" running alongside a non-gambling state handout system), there will be a parallel private hedging system. A bit like mortgage equity withdrawal. You sign a contract with the private company who agree to pay you a flat rate of £XX a month for the rest of your life, starting right now, on the condition that you forward direct to them any state handout you receive. So if you do live to 100 and end up on £1m a month, you have to turn it over to the private company, as part of your contract - that's what has paid for your flat rate that they have been paying you for the past 40 or 50 years.   

       Plenty of opportunity for mis-selling by the providers, but also the possibility of canny arbitrage by playing of the flat rate providers against the gambling increase providers...
pocmloc, Jan 28 2023
  

       Probably should clarify, this isn't a "bet" as such so you don't make it and have to stick with it. You wouldn't say at 10 years old "I'm gonna live to 200 and make a billion dollars!" and then be held to it.   

       It's just taking what they do now and expanding it. You can change your mind at any time. So you're going for the 100 year old million dollar a year payoff and get cancer at 65. Okay, you'd be taking your current rate immediately, whatever that was.   

       But you would have to stick with that. Couldn't go back and say "False test, I want to go back to the million dollar plan." You take a payment at a particular level that's your payment for life.   

       And also, this would all be paid for by those who, like you, went for the big bucks and didn't make it. In that respect, it's exactly like a lottery. 100 people go for the million dollar a year at 100 play, only 1 out of 100 make it, all that money saved goes to the surviver. You'd take whatever those 100 people would be making and give it to the one survivor. Not sure what that number would actually be, hire math people to figure it out.   

       And to further clarify, you're going for the 120 year old 2 million a year? Hope you have enough money to make it, because you don't get a penny from social security for the almost 60 years you bet it all on that one or two years of 2 million a year.   

       Which sounds insane, but what if it's all about making a big payoff for a year or two at the end of life to give it to the family?   

       Know what's crazy? I'd absolutely do that.   

       But here's the conundrum with this: would it be beneficial or detrimental to society as a whole? Do we get old people living in cardboard boxes because they have a gambling issue? That's why I'm thinking you'd have to add the means test.   

       But here's another turd in the punchbowl. If they already have money, why are we giving a million dollars to somebody who doesn't need it?
doctorremulac3, Jan 28 2023
  

       //why are we giving a million dollars to somebody who doesn't need it?//   

       It's their money. They payed into the program.
Voice, Jan 28 2023
  

       Seriously Doc. Who doesn't need a million dollars?
pocmloc, Jan 28 2023
  

       //It's their money. They payed into the program.//   

       That's absolutely true. And the contract to give one survivor payee the whole pot is voluntary.   

       Pretty tough to argue against that.   

       //Seriously Doc. Who doesn't need a million dollars?//   

       Know what sucks? If I got a million dollars (are we talking tax free? Because in California I'd probably only get about half of it) would it help? Sure. Would I retire on a beach someplace? Not even close. Although I'd probably buy that DeTomasso Pantera I could have bought in my youth that some moron told me was a bad investment. (I think I might have been that moron now that I think of it)
doctorremulac3, Jan 28 2023
  

       ////You'll get the best odds in your early years// not sure that's true//   

       Really? .. so what do you think an average twenty year olds chances of reaching 100 are? .. now what do you think an average 99 year olds chances (having already navigated all the risks of dying by accident / stupidity / extreme sports etc during the previous 99 years) of reaching 100 are?   

       The 99 year old has a better chance statistically of reaching 100 than a 20 year old, trust me on this.   

       A booky will give you a bigger pay out for the same amount bet the worse your chance of winning is.   

       Odds in betting refers to how much money you will win, winning more is better.
Skewed, Jan 29 2023
  

       Yes, but that's not how this works. The bet on how long they'll live is made at any particular age that they are eligible for benefits. They receive nothing until that age.   

       Maybe I over complicated it, it really is just an extension of exactly what they're doing now. You can get X benefits at 62, X times 3 at 70. I'm just saying keep it going and it gets more interesting as you have people dropping like flys who elected not to take benefits till 80 and all that money going to the ones that elected to wait till 80 and DID survive.   

       The title should probably be: "Extend Existing Social Security Benefits By Age Tables"   

       Actually that sounds kind of confusing too.
doctorremulac3, Jan 29 2023
  

       //but that's not how this works .. They receive nothing until that age//   

       You place the bet and you get nothing until you win the bet at the age you made the bet for, so how is that different again? cos it sounds exactly the same to me.
Skewed, Jan 29 2023
  

       Well, you’re not placing a bet. You’re electing when to receive benefits. Same as they do now, it’s just extended, both the ages where you can elect to start receiving benefits and the corresponding amounts which grow the longer you hold off.   

       Unlike a bet you can elect to change the date anytime you want.
doctorremulac3, Jan 29 2023
  

       [doctorremulac3] how would this affect the current FICA deductions and social security program for people who don’t opt in to your version? Would it be a separate fund?   

       —-   

       Really long postscript - mainly for readers outside of USA, who may not follow what doc is talking about. I don’t know how this compares to OAP arrangements in other countries, but here’s a quick overview of USA’s “social security” system.   

       The federal insurance program takes 15.3% of everybody's first $160,200 of annual income to cover retirement pay and subsidized medical insurance for the elderly. Self-employed and independent contractors have to pay the whole thing - but for employees who get a regular paycheck, the employer supposedly pays half and the employee pays half. Which is a myth, you’re really still paying the whole thing - you just don’t see the employer’s part on your paystub.   

       Starting at age 62, you’re allowed to start receiving a mostly fixed* monthly stipend for the rest of your life (*though there are annual cost of living adjustments). The base amount varies depending on how much was taken from you in your working years - the exact amount for each person is calculated by government employed “math nerds using actuary tables” - but in general the more you earned in you working life the more the stipend will be. It’s not enough to get by with unless you were already used to getting by with very little.   

       If you don’t start taking your stipend at 62, your base amount goes up 8% a year until you hit 70, at which point you start getting the payments regardless.   

       There are a lot of exceptions and complications, but that’s it in a nutshell.
a1, Jan 29 2023
  

       //If you don’t start taking your stipend at 62, your base amount goes up 8% a year//   

       Yes yes, it's called buying an annuity.   

       With a private pension the longer you leave it the more you've paid in so the more money there is in the pot and the more a year you can have each year .. PLUS .. the longer you leave it the less time you have left to spend it in so taking that into account you can have even more a year.   

       The annuity providers figure out how long an average person your age will live and make an offer on that (they offer too little they won't get the business, another company will, offer too much they make a loss).   

       It's all very mundane and standard .. your federal insurance program is just mirroring the outcomes of private sector pension arrangements (a little / somewhat), all very straightforward, expected and obvious.
Skewed, Jan 29 2023
  

       Spot on, [Skewed], I was just clarifying because doc’s original description and early annotations seemed to wander between the gov program and what an insurance agent or bookie could offer.   

       One huge difference though between buying an annuity and this social security program - the latter is pretty much non-negotiable. Baked into tax law, you don’t have any easy way to opt out or buy a bigger or smaller plan. Every wage earner pays into the system whether they want it or not. And it’s enforced mainly on lower and mid-income folks - once you make about 3x the median income, any wages above that aren’t subject to this tax.
a1, Jan 29 2023
  

       Well the bookie route doesn't really differ all that much from the more normal regular pension savings route, it just surplants the first part (saving with a normal pension fund), you'd then buy an annuity (with any of the winnings you didn't decide to spend right away) and carry on as normal.   

       Imagine the odds you could get as a 20 year old for a bet that you'd live to see your 100th birthday.   

       If you can find a bookie who'll give you odds that you're confident will still be in business 80 years later.   

       If you promise to live an intemperate life, drink, smoke, eat to excess, enjoy extreme sports and all the things that make life fun they'd give you even better odds, which is kind of glorious really.   

       A £10,000 bet made at twenty should net a considerable win (even after tax).   

       And the annual annuity you could buy with it at that age should be pretty good.
Skewed, Jan 30 2023
  
      
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