Do you still think privatizing Soc Security is a good idea?

[HomeBrewerDude]

I have vivid memories of heated discussion over whether or not it was/is a good idea to allocate some SocSecurity funds to stock market investment. Anyone want to reconsider? Anyone still think its a good idea? Anyone want to bet that this will never come up in a political debate for the next presidential election?

Personally, I was never for it. To me social security is about security rather than gains. Furthermore, it isn't designed to provide complete financial support for retired persons. If I choose, I can allocate some of my income to market investments. Now, with a year of losses, I am convinced that its a bad idea. I know the goal of market investment is long term, and downturns are averaged out over the long run, BUT still...I would be very upset if my social security AND personal investments were all tanking 1-5 years before I was planning to retire.

 

[Viper GTS]

Eliminating it entirely would be better.

Problem is doing that would knock out the incomes of a bunch of people who rely on it.

Yet my generation is funding it for them, so by the time we're that old we'll want it...

It's a vicious cycle which has to be broken at some point. Yes, a couple generations will get screwed.

But everyone will be better off in the end.

Viper GTS

 

[vi edit]

It's been a 2 year downturn. I've got another 40+ before I start collecting SS. I'll put my faith in the stock market and MY ability to manage the funds before I put any sort of faith in there actually being any of my money left in there for me with the government mananging it the next 40 years.

 

[MichaelD]

My mother is living off her SS...eliminating it would put her in the street. <---Of course, she'd move in with me! My Mommy will never be homeless!!!!

OK, that warm fuzzy crap aside; if they gave me the option of yanking every penny that is mine out of there today, I'd be first in line.

I have been paying into SS for exactly 20 years and 1 month. I want it to be there when I retire. The likelihood of that? Slim to fat-fetchin'-chance. :|

I'd take it all and throw it into a CD. Not the biggest money-maker by a longshot, but SAFE.

Those of us in our 30's now will not see SS. The 20-somethings at least have another 10 years to start saving. I wish I had started saving at 21 instead of around 28 or so.

 

[GoodRevrnd]

:| It is such a goddamn waste of money. I could slap it all into an IRA and get way better returns than what I'll get, not to mention a mutual!

 

[klah]

Here is the definition of SS: SS Definition

 

[Mister T]

My first vote would go to abolishing SS....
my second vote goes to privatization....

To all those who despise the idea of privatization, please tell me how municipal pension plans work?

 

[Mister T]

Originally posted by: klah
Here is the definition of SS: SS Definition

pyramid scheme

An illegal investment scheme in which investors are promised ridiculous returns on their investments. Early investors are paid with money from later investors, but the system inevitably collapses and later investors get nothing.

yup, 1-2% is ridiculous indeed...

 

[dullard]

Social security has historically given about a 6% return. If you make a bunch of assumptions, then it will be as low as 2% by the time today's teenagers retire. Between 2% and 6% is a decent gain - better than you'd get by putting it in the bank. However it is less than the 10% return people assume you can make from the stock market. We have to make a decision: is that extra few % gain worth the risks in the stock market.

What are some of the risks:
1) If I remember the numbers right Bush claimed he wanted to invest about $2 trillion in the stock market. But to do that he claimed it would cost $1 trillion in administrative/start-up costs. $1 trillion is quite a large amount of money that will be gone forever.
2) If he did that sometime at the beginning of his term, that $2 trillion investment would now be worth $1.5 trillion. So basically he would have paid $3 trillion and now have stocks worth $1.5 trillion a 50% loss. Sure for those of us who can wait years for the stocks to come back, we will be just fine. But what about those people retiring now? How will they like to know their money just lost 50%? Heck even just to make up that $1 trillion in start-up costs the Dow would need to reach 15,000. Not likely that we will see that occur this decade - thus for the next decade the people retiring will have lost money.
3) What about corruption? I can see someone in congress becoming corrupt. Suppose a congressman had a large share of stocks in company X. That person then adds a small bit of pork to a bill that is sure to pass - that pork saying that the social security must now buy stock in company X. Suddenly this huge cash flow into company X will raise its price drastically - letting the congressman sell his shares making millions in profit. What's the problem with this? Well no one did any research into company X, it may be a good company, or it may not making that stock price crash and we lose most of our money.

So is the few extra percent worth: 1) the start-up cost, 2) the short term loss to many people, 3) the risk of corruption? I'm personally not worried about points #1 and #2 since I'm young. But I'll be terrified of #3.

 

[HomeBrewerDude]

Remember that SS isn't currently a 'savings' account. Current payouts are paid from current contributions.


WHy not just increase the minimum age at which benefits can be received?
Why not just lower the benefits received by those most financially secure?

Seems that the Bush plan never argued against other plans. Rather they ran numbers only against the current payment structure. I might be wrong since i am just working off my rather bad memory.

 

[Ornery]

"Least we not forget, all federal employees do not pay into social security as they have a 401k like plan. If such a thing is good enough for federal employees, it is good enough for the rest of us." -
charrison, 10/04/2002 8:38 PM

HELL NO, I WON'T FVCKING FORGET IT!

...the FACT is, SS is just one more lame, screwed up, doomed to fail, typical Liberal Democrat program!

Many Federal workers have wonderful retirement accounts and pay zip into SS. Anyone care to explain to me why the rest of us shouldn't have the same option? :|

 

[vi edit]

To all those who despise the idea of privatization, please tell me how municipal pension plans work?

Pretty damn well.

My father is a member of IMRF. Here's a rough estimate of what he'll be looking at when he retires:

You have selected the following plan Regular
You gave your age at retirement as 65 Years 6 Months
You gave your service at retirement as 40 Years
You gave your monthly Final Rate of Earnings for benefit purposes as $ 3,000
Based upon the data above, you would be entitled to a monthly IMRF pension benefit of $ 2,250.00
Each January 1st your monthly benefit will increase by $ 67.50

Not too shabby. Goes up an extra $800 a year. This doesn't include SS, my mothers pension, her SS, and their private investments. And my dad doesn't even make that much a year.

 

[woodie1]

I think each individual should have the option to invest a portion of his/her SS deductions any way they choose.

They have already increased the age and they tax SS benefits after you reach a certain income level.

 

[FeathersMcGraw]

Originally posted by: yamahaXS

Personally, I was never for it. To me social security is about security rather than gains.

The issue driving the concept of privatization is that there won't be a security past the next generation or so of seniors given the reduction of input into the system due to the weakening of the economy coupled with the increased life expectancy of senior citizens.

But I've been working and investing with the assumption that none of the money I've put into the system will be coming back out, so pondering how to make the system solvent isn't exactly a pressing issue to me.

 

[brtspears2]

I'm proud to say that my SS tax dollars and other tax dollars in other gov't welfare programs either keeps those who are too old to work for a good living alive and comfortable or allowing some to buy booze and cigs...whoopie.

 

[vi edit]

Originally posted by: brtspears2
I'm proud to say that my SS tax dollars and other tax dollars in other gov't welfare programs either keeps those who are too old to work for a good living alive and comfortable or allowing some to buy booze and cigs...whoopie.

SS also helps make sure that slot machines are fully functional too!

 

[glenn1]

My first vote would go to abolishing SS....
my second vote goes to privatization....

Bingo.

 

[klah]

Originally posted by: Mister T

Originally posted by: klah
Here is the definition of SS: SS Definition

pyramid scheme
An illegal investment scheme in which investors are promised ridiculous returns on their investments. Early investors are paid with money from later investors, but the system inevitably collapses and later investors get nothing.

yup, 1-2% is ridiculous indeed...

Right now you earn 4 SS credits/year for having ~$3500/yr income (6.2% to SS). After 40 credits (10 years) you are fully vested in the system. After age 67 you will get $1500/month(minimum) for the rest of your life. So 10 years of SS will give you $180,000 return on a $2200 investment. This is the case for every 55 year old legal immigrant that enters the US and works for 10 years.

 

[AvesPKS]

Are you guys even taking into consideration survivor's benefits when discussing abolishing SS?

 

[Orsorum]

Originally posted by: klah

Originally posted by: Mister T

Originally posted by: klah
Here is the definition of SS: SS Definition

pyramid scheme
An illegal investment scheme in which investors are promised ridiculous returns on their investments. Early investors are paid with money from later investors, but the system inevitably collapses and later investors get nothing.

yup, 1-2% is ridiculous indeed...

Right now you earn 4 SS credits/year for having ~$3500/yr income (6.2% to SS). After 40 credits (10 years) you are fully vested in the system. After age 67 you will get $1500/month(minimum) for the rest of your life. So 10 years of SS will give you $180,000 return on a $2200 investment. This is the case for every 55 year old legal immigrant that enters the US and works for 10 years.

That's great. Nice to know the money I've earned wiill be a good investment for them. Too bad for me that in fifty years, when I want to retire, I'll be able to support myself with what's left over after SS and other money is spent on other people.

Hail Mother America.

 

[SagaLore]

Social Security should only be a bank of funds. Government should take the tax, put it in a savings account, let it accrue interest, and pay the collected money back at retirement.

I'm not exactly sure how it currently works... BUT, how the heck did it end up where current tax payers are paying for current retirees? That makes no financial sense. If a generation wants their taxes low, then they should be lowered, with the knowledge that the SS return will be lower. If you pay higher taxes that go into SS, then you should get more out later.

The way it is now is screwed up. I blame democrats.

 

[Drekce]

I personally would not mind having full control over all of my social security money. For me I think it would be great, I would be smart, responsible, etc. . The problem is with all of the people (problobly a majority) who will be completely irresponsible with their money. What would happen is that we would have a group of retirees who did well and have plenty of money for retirement, and then another group who are completely broke. This poor group would then most likely complain to the government about their problems (due to their irresponsibily) and ask for a handout. This causes the current working generation have to fund the original amount of social security PLUS a second chunk that would be used to supplement the retirees who did not plan well.

I hope to have plenty of money in my 401K, IRA, Pension when I retire so that I will be pulling in close to what I was while working without even factoring in social security. That goes to the grandkid's college accounts.

 

[ElFenix]

it eventually becomes impossible to support a pay-as-you-go SS plan when the interest rate paid on it is lower than the growth rate of the population supporting it. SS is doomed to failure.

 

[CPA]

Originally posted by: Viper GTS
Eliminating it entirely would be better.

Problem is doing that would knock out the incomes of a bunch of people who rely on it.

Yet my generation is funding it for them, so by the time we're that old we'll want it...

It's a vicious cycle which has to be broken at some point. Yes, a couple generations will get screwed.

But everyone will be better off in the end.

Viper GTS

I would also add, that if we are to continue with it, the hell yes let me determine where my money is invested. For now, the return is less than what would be earned on T-bills. give me a break, my 5 year old could do better than that with a blindfold, dart, and the financial section of the wall street journal.

 

[dullard]

The way it is now is screwed up. I blame democrats.

Al Gore made it one of his major campaign promisses to take the first major step to end pay-as-you-go SS. He wasn't elected. Bush made privitazation one of his major campaign promisses, he has done nothing. So it is possible that Gore would have done nothing as well - however at least he wanted to start ending that silly practice.