So, why wouldn't privatizing SS work in the US? Works in Chile.

[misle]

I found this to be a pretty interesting article.

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=570629

May 1 marks the 30 years since Chile became the first nation to privatize its social security system. By turning workers into investors, the move solved an entitlement crisis much like the one America faces today.
...
Over the last three decades these accounts have averaged annual returns of 9.23% above inflation. By contrast, U.S. Social Security pays a 1% to 2% (theoretical) return, and even less for new workers.

As a 33 year old person, I have no doubt that SS will not be there for me when I retire. Yet, I'm paying into it just like everyone else.

We need to adopt a new system so, why wouldn't this one work for us?

 

[Mursilis]

I found this to be a pretty interesting article.

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=570629



As a 33 year old person, I have no doubt that SS will not be there for me when I retire. Yet, I'm paying into it just like everyone else.

We need to adopt a new system so, why wouldn't this one work for us?

The gov't has determined you're too stupid to make your own financial decisions.

(and the sad part is, for a lot of Americans, the gov't is probably right)

 

[soulcougher73]

Because Americans as a whole are dumb. If they stopped taking SS and just said invest as you see fit. Most Americans would not invest it. They would just spend that money on crap. Then when they are old with no retirement we will have to take care of them on the tax payers dime again. SS is a neccessity in my opinion. The problem comes when you dip into SS for pet projects.

 

[misle]

The gov't has determined you're too stupid to make your own financial decisions.

(and the sad part is, for a lot of Americans, the gov't is probably right)

See, I think this kind of thinking is our downfall. We just assume everyone is too stupid, when in reality, the vast majority would probably be just fine.

 

[misle]

Because Americans as a whole are dumb. If they stopped taking SS and just said invest as you see fit. Most Americans would not invest it. They would just spend that money on crap. Then when they are old with no retirement we will have to take care of them on the tax payers dime again. SS is a neccessity in my opinion. The problem comes when you dip into SS for pet projects.

Read the article.

Chilean workers must pay in 10% of their wages (they can send up to 20%) to one of several conservatively managed and regulated pension funds.

 

[ConstipatedVigilante]

The gov't has determined you're too stupid to make your own financial decisions.

(and the sad part is, for a lot of Americans, the gov't is probably right)

Social Security was created because old workers didn't have pension plans back in the 40's and the government wanted to keep them off the streets. It doesn't make any sense now - everyone with a half-decent job has a 401(k) or a CD, and everyone else who can make ends meet can consult a financial advisor for help. An inefficient system based on IOUs that earns only a very small amount of interest is retarded.

But despite all that, the average American would put that SS money towards a new TV instead of retirement. Or the lottery.

 

[jacc1234]

If we did this the "managers" of the funds would squander all of the money then ask the government for a bailout.

 

[Mursilis]

Because Americans as a whole are dumb. If they stopped taking SS and just said invest as you see fit. Most Americans would not invest it. They would just spend that money on crap. Then when they are old with no retirement we will have to take care of them on the tax payers dime again. SS is a neccessity in my opinion. The problem comes when you dip into SS for pet projects.

You're answering a question which wasn't asked. A privatized SS system could still be mandatory (and probably should be, given the choices people make). In a privatized system, the money would actually be YOURS, and COULDN'T be taken for some pet project, no more than Fidelity can take your IRA, blow it on an epic Vegas weekend, and send you a letter saying "Tough luck, but we had a blast!!", which is what the gov't is doing now with your SS contributions. Well, except the govt's epic weekend bender is taking place in Iraq and Afghanistan, not Vegas, but still...

 

[Craig234]

As a 33 year old person, I have no doubt that SS will not be there for me when I retire.

And the propaganda from the rich has fooled you for their benefit.

Self-fulfilling prophecy, really - vote to destroy it, then, see, it's gone!

 

[Jaskalas]

Social Security was created because old workers didn't have pension plans back in the 40's and the government wanted to keep them off the streets. It doesn't make any sense now - everyone with a half-decent job has a 401(k) or a CD, and everyone else who can make ends meet can consult a financial advisor for help. An inefficient system based on IOUs that earns only a very small amount of interest is retarded.

But despite all that, the average American would put that SS money towards a new TV instead of retirement. Or the lottery.

Then they can sit out in the street with their new TV. :hmm:

 

[silverpig]

Because those funds would be used to purchase a crapload of mortgage backed junk securities, and when you retire and lose your $4 million rancher in Kansas because it drops in price to $264,000, your retirement fund will only be able to get you a handful of bazooka joes.

On the bright side, you could probably get a job as a repoman.

 

[MayorOfAmerica]

The gov't has determined you're too stupid to make your own financial decisions.

(and the sad part is, for a lot of Americans, the gov't is probably right)

Privatizing SS doesn't mean you get to make any decisions at all. I think what it means is that a private company (or companies) would manage the SS coughers and invest it as THEY see fit (somewhat akin to a 401K). I'm pretty sure you'll still be required to pay in at least a minimal percentage by law. There are obvious pros and cons to this approach, as well as any others.

 

[Atreus21]

And the propaganda from the rich has fooled you for their benefit.

Self-fulfilling prophecy, really - vote to destroy it, then, see, it's gone!

Those evil motherfuckers.

 

[boomerang]

I found this to be a pretty interesting article.

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=570629



As a 33 year old person, I have no doubt that SS will not be there for me when I retire. Yet, I'm paying into it just like everyone else.

We need to adopt a new system so, why wouldn't this one work for us?

Despite all the nay-sayers in this thread it would work just fine. Why it won't happen is that it shifts the power from the Government to the people. That's not going to fly.

It could be done, but it would mean electing people to office that are not in the mainstream. They're out there, but the political machine in the U.S. brainwashes us into thinking that it's scary and dangerous to elect people with no political experience.

Our path is pretty clear. Some feel comfort in continuing the status quo, although the inevitable result is laid out before us and it sure ain't pretty. Virtually everyone in office needs to be voted out. If that can't be done, they need to be forcibly removed from office. Either path is scary. It comes down to whether it's preferable to be led to slaughter or to fight back.

 

[wuliheron]

I found this to be a pretty interesting article.

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=570629

As a 33 year old person, I have no doubt that SS will not be there for me when I retire. Yet, I'm paying into it just like everyone else.

We need to adopt a new system so, why wouldn't this one work for us?

Get it straight dude. Americans have the lowest taxes, highest debt, and highest living standard in the world. We're living high on the hog and willing to make anyone and everyone pay for our lifestyle. That means you sucker!

Now get back to work.

 

[Craig234]

Those evil motherfuckers.

It's always fun when people trying to be sarcastic say the truth by accident.

 

[GuitarDaddy]

The biggest obstacle to privatizing SS is the funding. The government has been using the SS funds as their credit card for so long that there is no way they could instantly fund the accounts of all the vested participants. They would somehow have to convince the private fund managers to take low interest IOU's from the government to fund the accounts.

 

[MayorOfAmerica]

the political machine in the U.S. brainwashes us into thinking that it's scary and dangerous to elect people with no political experience.

Yeah all that "Obama is inexperienced" propaganda coming from the Democratic political machi... oh wait.

 

[Schadenfroh]

And the propaganda from the rich has fooled you for their benefit.

Then do not worry about it, the government, not your planning or your family, will take care of you when you retire. Pay your taxes to our benevolent and omnipotent federal government and everything will be alright.

If they stopped taking SS and just said invest as you see fit. Most Americans would not invest it. They would just spend that money on crap.

Agreed, a sizable portion of the population would NOT make wise choices. That is why if SS, which is insufficient enough already, is phased out in favor of another system, there are other approaches we must take to ensure that society is not burdened by those unwilling to prepare for the future.

Possibilities (in no order)
1. Personal and family responsibility: Free for all, do as you please and we will not help you if you use all of your income on hookers and blow without saving anything and then find yourself unable to retire. Alternatively, no help if you make poor investment choices and your investments are wiped out.
2. Personal responsibility with a safety net: Basically government investment insurance, if the person invests up to x percent of their income for their retirement in funds classified as low-risk and they get wiped out, replace a percentage of its inflation adjusted value (up to a fixed cap). This would be optional, person could still use all their extra money on hookers and blow, no help from government if the latter.
3. Basically what Chile is doing
4. Status-Quo: Pray that the politicians do not rob "borrow from" Social Security to the point where they have to raise the retirement age into oblivion and you never see it.

For 1 and 2, it will require that private charities and family members help those less fortunate or those that made poor choices in life.

The retirement issue is complicated due to divorces wiping out savings. We need major reforms to address how unfairly and biased our courts are in divorce / custody cases. Maybe if people had to rely on their families as their safety net, rather than the government, the divorce rate would not be so high and people would consider their position more carefully before getting married.

Whichever route we take, there are going to be a few unlucky outliers that will suffer, but that is the case under just about any system.

 

[Craig234]

The biggest obstacle to privatizing SS is the funding. The government has been using the SS funds as their credit card for so long that there is no way they could instantly fund the accounts of all the vested participants. They would somehow have to convince the private fund managers to take interest free IOU's from the government to fund the accounts.

IMO, the interested parties - Wall Street - who stand to make so many billions off this, by adding massive overhead draining money, will understate the downsides.

And proponents for Social Security will understate the benefits, of which there are some.

But on balance, I'm fine with not having this massive program Republicans want to destroy for reasons as bad as not wanting the Democrats to get political credit, turn into a privatized program fueling the Wall Street machine far more, enriching the interests who already dominate our political system far too much, which will lead to an even GREATER weakening of democracy and empowering Wall Street to screw the people.

But I do want to see the government stop borrowing the 'trust fund'.

 

[Mursilis]

The biggest obstacle to privatizing SS is the funding. The government has been using the SS funds as their credit card for so long that there is no way they could instantly fund the accounts of all the vested participants. They would somehow have to convince the private fund managers to take low interest IOU's from the government to fund the accounts.

This is mostly correct, but you wouldn't need fund managers for a privatized SS plan. Just mirror the fed. employee TSP system, and offer a few index fund options. Few fund managers offer much value-added.

 

[CPA]

The gov't has determined you're too stupid to make your own financial decisions.

(and the sad part is, for a lot of Americans, the gov't is probably right)

This, plus where would they put their IOUs>

 

[Atreus21]

It's always fun when people trying to be sarcastic say the truth by accident.

It's also funny when...oh forget it.

 

[Jhhnn]

It works for Chile because they're a small player in world markets. If the US adopted that plan, the first thing that would have to happen is borrowing nearly $3T to pay off the trust funds & pass them into private hands. I'm sure that wouldn't be a shock to capital markets, at all, right? No bubble potential there, either, I'm sure...

So, uhh, what happens to people in Chile who outlive their money? Do their fund managers send them a cyanide pill with the last payment, or would that cut into the profit margin too much?

 

[PokerGuy]

We know that given the option, many people would do dumb things and not save for retirement. Since we're never going to be OK with a society where millions of older folks live in poverty on the streets, having mandatory x percent investment in retirement savings plans makes sense to me. Make everyone sock that percentage away, but limit how that money can be invested (maybe have a government agency in charge of rating investments as "government retirement approved or not").

That way people can control their investments, they get a higher return, and at the same time they are guaranteed a minimum level of return that's probably better than what SS is giving them today anyway. There would be competition for people's retirement savings, so the consumer would get the best rates.

This could work very well, but will never happen because 1) government always wants more control over everyone, not less, and 2) the spenders in government want to keep squandering the billions coming into SS today, there's no way they're giving that up.