Suppose you Privatize 25% of Social Security?

[Chuckiechan]

Using this calculator:

http://www.tcalc.com/tvwww.dll?Save

If a person making 30,000 per year puts 25% of his 15.2 % Social Security deduction away for 45 years:

30,000 @ 15.2% = $ 1974 Divided by 52 weeks = $ 38.00 per week times 25 %:

= $ 9.50 per week. That is: $84,480.27

At retirement age of 65, if distrubuted over 15 years as a supplement, you could draw an extra $ 665.00 (using the 5% interest rate model)

I don't see the issue here...

[Pexster]

One big problem is that the 25% is already budgeted to pay for current retiree benefits. Where will that money now come from? The immediate gap would be huge.

[Vagabond]

yes that is an issue but dam let me plan my own retirement..

I really dont believe it is the govs job to make sure you are able to retire...

how ti fix the above issue well im not quite sure but i am sure there are some thoughts... and hey i do have a few...

[loftezy]

I am with Pexter on this one. The current SS goes to the checks of the elderly. In order for the privatization of 25% to work, workers would have to pay 1.25 times more than they are paying now. There is no other way.

[loftezy]

yes that is an issue but dam let me plan my own retirement..

I really dont believe it is the govs job to make sure you are able to retire...

how ti fix the above issue well im not quite sure but i am sure there are some thoughts... and hey i do have a few...

You may not feel that it is the governments job to plan your retirement but the government will have the responibility to take care of those individuals who failed to plan. The original idea of SS was going to save the government money and in essence, you were planning your own retirement. However, along the way, some politicians decided to start diping into the funds and now the government can't pay it back.

[Vagabond]

nice thought but i still dont think its the gov's job
but yes what do you do with the people who can not or fail to save... big issue yes...
One i am (or atleast think i am) always willing to help those actually need help. but hey our gov is set up to protect and provide for the stupid and inconsiderate people...

bring back natural selection (hehe ok way off topic sry but hey having a little fun)

now i have to give to SS and put money away for retirement on my own so i am really paying x2 to retire...

but woohooo my parents just started collecting.......

[Pexster]

I'm not opposed to the idea of letting people control some portion of their SS investments. But the shortfall mentioned above would have to be dealt with somehow, and no one has the political courage to address it. My main gripe with SS remains the wage cap on withholdings. (I think it's at $92K now?) All the actuaries say this alone won't solve the problem, but I say let's get rid of it and see how the numbers shake out after a few years. Then work from there.

[Chuckiechan]

EDIT BTW: Let try to keep the current political race of of this if we can...So far so good!

To make up the benefits, I understand the government is taking in more SS today then they are spending today. That will make up some of the gap.

Raising the wage cap dosen't bother me if used to finanace this program.

I think one way to do this is with an age cutoff, like require you to be under 30 years old to join the new plan. It could even go to 18 if necessary, and then moved up gradually as funds become available, using the OFDO statistical formula.

** Old Farts Dying Off...

[RayH]

Is privatizing Social Security anything like the bankrupt pension plans? What if the PRIVATE goes bankrupt? If the government guarantees the PRIVATIZATION is that socialism for private industry and free enterprise for the worker?

[Vagabond]

are not banks guaranteed ??? but if a 1920 style crash occurs will it not take SS with it..

[LeftCoast]

nice thought but i still dont think its the gov's job...

It IS the government's job to follow through on the assurances made to the workers who've been getting jacked a substantial percentage of their income over the last thirty or forty plus years. This generation would prefer to not be the only ones left standing without a chair when the music stops...

[aldtech]

I agree and think that a partial privatization of SS is acceptable and a proper course for the government to take. Along with the partial privatization there should be guidelines and assurances that the money is not lost and the potential profit gained for those managing the accounts be very minimal and capped. We do not need Smith/Barney (SP) making billions off my money with no accountability and stopgap measures in a market decline.

Stopgap measures should include immediate freeze of accounts that loose X% +. If an account looses 5% over X period of time than the account is frozen with the funds transferred to a more profitable account or a stable money market account until the market turns up.

The government should in no way make any profit from this move, any money made should be completely controlled and maintained by SS to be given back to the people.

Absolutely – privatization of retirement funds should have been pursued years ago and Like Chuckie said this should not be a partisan political thing.

[Chuckiechan]

I think the government can make standards as to what intruments of investment constitute "acceptable".

Anyone who has money being managed by a professional declares a "risk tolerance" and investments are matched to this. The government could regulate through "risk tolerance" using those formulas used by the private sector.

You can have people investing in corn futures!

[LeftCoast]

are not banks guaranteed ??? but if a 1920 style crash occurs will it not take SS with it..

Yes...by the same government that's having difficulty fulfilling their obligation to SS now. It would be akin to Enron giving you a "guarantee" against their stock ever becoming worthless...

To make up the benefits, I understand the government is taking in more SS today then they are spending today. That will make up some of the gap...

No, it won't. The Baby Boomer generation is just becoming of retirement age, and is the reason SS's in deep schitt...

By 2025, the baby boomers – the 75 million Americans born between 1946 and 1964 - will cause the U.S. population ages 65 and over to increase to 19 percent of all Americans. During the next 25 years, the population that is under 18 will decline slowly.

This means many more people will be drawing SS, with fewer people paying in; not good, unless the government's planning some type of "Logan's Run" scenario...

(For those who may not really know what Baby Boomers are, the depression of the 30's and WWII of the 40's greatly delayed folks starting families. They made up for lost time though, starting in 1946, with @ 18 years of long d!@#ing, that resulted in the largest population increase in the Nation's history (excluding immigration).)

[implexant]

If I put $200 per month into a ING Direct Long Term investment account with 8% return, in 43 years (I'd be 60yrs of age) I'd have $824,872.29.

If I put $250 per month into a ING Direct Long Term investment account with 8% return, in 43 years I'd have $1,031,091.93.

In either circumstance, this sure beats the $700/mnth or so that I'd normally get from SS.

So... in short. I'd fully support axing SS

-Chris

[ChubTub]

Nope not a good idea. Some people can not plan what so ever. I do agree that it is not the governments job to take care of people. Think of it more or less of the gov protecting itself. If this happens years down the line we will have a large chunk of the population who can not work and will have not a penny to there name. Then we will have to create programs to take care of them keep them off the street etc. This will cost tax payer money.

Plus what about all that money I have payed in?

It also adds to more taxable income. Unless you can take it out pre tax.

[RayH]

It is fraud waiting to happen. If the US government backs the instruments, then it is SOCIALSIM for the INVESTMENT COMPANIES and FREE ENTERPRISE FOR THE PUBLIC. Stocks better find their own way to prop themselves!

[Vagabond]

Hey LeftC i never said leave the peps hanging out to dry.....

[implexant]

Nope not a good idea. Some people can not plan what so ever. I do agree that it is not the governments job to take care of people. Think of it more or less of the gov protecting itself. If this happens years down the line we will have a large chunk of the population who can not work and will have not a penny to there name. Then we will have to create programs to take care of them keep them off the street etc. This will cost tax payer money.

Plus what about all that money I have payed in?

It also adds to more taxable income. Unless you can take it out pre tax.

Most people can't plan, simply because they've depended on the government for so long. Others are just lazy. After all, if they loose their job, the government will help them out... right?

Even if a large amount of the population (elderly) doesn't have SS to take care of them it would logically be the family's responsibility to take care of them.

Here is a quote from The American Ideal of 1776 by Hamilton Abert Long (more about the author here):

8. The Preamble of the United States Constitution specifies "the general Welfare" merely as one of the listed goals to be served by the Federal government in the exercise of the limited powers delegated to it, as enumerated in the body of that instrument. This mention of "the general welfare" in the Preamble was intended, therefore, to serve in effect as alimit on the use of those delegated powers. The Preamble does not constitute a grant of any power whatever to the government. The only other mention of the words "general welfare" in the Constitution is in the Taxing Clause (Article I, Section 8) which authorizes Congress to collect taxes "..., to pay the Debts and provide for the common Defence and general Welfare of teh United States..." Here, too, the words "general Welfare" were designed to serve as a limitation in effect - as a limit on the power granted under that clause. This excludes any power to tax and spend for all purposes which would not qualify as being for the "general Welfare of the United States" as a whole - for instance, it is excluded if for the benefit merely of a locality or some Individuals in the United States. The clause does not empower Congress to spend tax monies for any and every purpose it might select merely on the pretense, or even in the belief, that it is for the "general welfare." Congress possesses no "general legislative authority," as Hamilton states in The Federalist number 83.

Or if that does not suffice, take, for example Thomas Jefferson's thoughts on the redistribution of wealth (or the lack thereof):

[The tax system must] be equally and fairly applied to all. To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare [give] to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, "the guarantee to every one of a free exercise of his industry, and the fruits acquired by it." If the overgrown wealth of an individual be deemed dangerous ot the State, the best corrective is the law of equal inheritance to all [of his kin] in equal degree; and the better, as this enforces a law of nature, while extra-taxation violates it.

Also, as Thomas Jefferson again states, no generation has a right to burden the next with a vast public debt:

What is to hinder them [the government] from creating a perpetual debt? The laws of nature, I answer. The earth belongs to the living, not to the dead. The will and the power of man expire with his life, by nature's law... Each generation has the usufruct of the earth during the period of it's continuance. When it ceases to exist, the usufruct passes on to the succeeding generation, free and unincumbered... [No generation has a right]... to bind the succeeding generation... [with vast public debts].

And anyway, since when did the people of the United States authorize the federal government to convert to socialism? I hate socialism.

-Chris

[MTAtech]

The privatize Social Security plan is a crystal clear con. What’s playing out in America right now is the bait-and-switch strategy known on the right as “starve the beast.” The ultimate goal is to slash government programs that help the poor and the middle class, and use the savings to cut taxes for the rich. But the public would never vote for that.

So, the right dreams up programs - like privatizing Social Security, that guarantee failure and force enormous increases in Social Security taxes. The follow-up proposal in the future will be to eliminate the program entirely - the original objective.

Regardless of how you feel about Social Security, it is an obligation to millions of people that have paid in all their lives. As for its benefits, most seniors would be eating cat food for dinner if it wasn't for SS. For the first time in history, retirees are more independent and less reliant upon their children for support. Before Social Security, older Americans were dying of starvation or dependants of their kids.