Originally Posted by min0 lee
SS won't pay.
Investing in stocks and bonds
Relying on the system to pay current level of benefits
Which do you think is riskier for average American workers today: investing some of their Social Security taxes in stocks and bonds, or relying on the Social Security system to pay them the current level of benefits when they retire?
http://www.businessweek.com/magazine...7142_mz029.htmSocial Security: The Pros And Cons Of Private Accounts
Get set for the biggest political brouhaha of our time -- the battle over Social Security. Before the nation gets swept up in rhetorical excess, it might be wise to step back from Republican shouts of "crisis" and Democratic accusations of "wrecking the safety net" to take a pragmatic look at the issues at hand. Fortunately, once we get beyond the blistering heat of political discourse, the economic choices on Social Security become much clearer, and perhaps less threatening.
The Bush Administration says that there is a crisis in the Social Security system and that private accounts can help solve the problem. The first statement is false, but just because some Republicans are hyping the issue doesn't mean private accounts are a bad idea. They are, in fact, worthy of consideration.
"Crisis" implies immediacy, and there is nothing in the years or even decades ahead that suggests any crisis. Higher productivity and economic growth rates are pushing back the date when the Social Security trust fund runs dry. Federal actuaries say it will now be 2042. The Congressional Budget Office says it will be 2052. Until then, retiring baby boomers get 100% of their benefits. Worst-case scenario: If nothing at all is done to reform Social Security, payroll taxes will still cover 75% of the benefits afterwards. With net worth rising to record levels, let's be honest. Social Security is a problem, not a crisis. What are the solutions?
Private accounts are worth considering. But they are no panacea. Despite what ardent advocates say, the investment returns in private accounts cannot make up the entire $3.7 trillion shortfall in Social Security. But they can add up. And private accounts have other virtues. You own them, you have investment choices, and you can pass them on to your heirs. And a prefunded retirement system, in principle, is financially sounder than the current pay-as-you-go system.
But private accounts come with costs. The first comes in the form of risk. The experience with 401(k) retirement accounts shows that many people fail to invest enough or diversify sufficiently to maximize their returns. Low-income workers, who need safety the most, are much less likely to participate. The same is likely to happen with private Social Security accounts, hurting many, if care is not taken.
Then there is the $2 trillion it will cost the government to switch to private accounts. For a budget that is already in deep deficit, these extra trillions could send interest rates higher. The White House is trying to convince Wall Street that the new debt doesn't count because it will be offset by a reduction in the government's $3.7 trillion in Social Security liabilities. Therefore the debt won't raise rates.
Don't bet on it. The cost of long-term entitlement programs such as Social Security and Medicare is not priced into the financial markets. When the new Medicare drug benefit bill was passed in 2004, increasing government unfunded liabilities by $8 trillion, the markets didn't move. The lesson is that bond markets don't react to long-term implicit liabilities of the government, only real IOUs. Let's be honest about the cost of transition to private accounts. Rates may rise, and Federal Reserve Chairman Alan Greenspan is said to be concerned.
Let's also be honest about Social Security benefits. With or without private accounts, benefits must be trimmed for Social Security to be solvent in the long run. A plan put forth by a Bush appointed commission would switch the indexing of Social Security benefits from wages to prices. Current average Social Security checks cover 42% of the average worker's pay. The change in indexing could cut that to 20%. This is draconian. The White House is considering less drastic means of cutting benefits (except raising the payroll tax rate).
The Democrats say Social Security can be fixed without introducing the risks and costs of private accounts. They prefer a mix of raising the payroll tax rate, increasing the cap on the payroll tax above $90,000, and boosting the retirement age.
The truth is that despite their political differences, the proposed Republican and Democratic plans to reform Social Security differ little in outcomes. A plan commissioned by the White House cuts the $2,032 per month that Social Security now promises to deliver in 2075 to $1,615. One much-discussed liberal proposal cuts promised benefits by 8.6%, to $1,857. That's a difference of only $242 a month some 75 years in the future when just about anything can happen.
As negotiations over Social Security proceed in the months ahead, politicians would serve the public well by considering a practical mix of solutions to the problem. Private accounts make sense for many, but a voluntary system might fail to attract the very people who need it most.
It's not that I have no opinion, it's that I don't care. I have no plans to live off of SS.
I could care less, if you are depending on the Gov to help you out in any way in your life you are fucked.My Retirement was set up the day I was born, all good parents start saving money for their kids when they are babys.
buy the indexes of all major markets!
Originally Posted by ForemanRules
I agree 100%. I do not care how hard I have to work, I am going to make sure my kids are taken care, and that is counting highschool, college, and retirement.
BTW, I hate you Foreman.
I'll put my kids through school. Where they go from there is up to them. No free ride from me.
Originally Posted by DOMS
So the consensus here is that some will have invested there money wisely and others were fortunate to have wealthy parents.
Things change...shit happens....and there is no sympathy for old people.
I'm going to have to stop paying because I won't get my money back -
Why you whipper snapper you.Originally Posted by BigDyl
That damn kid on your lawn again, Min0?
There are plenty of very smart people, much smarter than any of us, who say that SS will definitely fail before someone my age sees any money. The government doesn't have any real responsibility or accountability to us, so I don't doubt it.
I would much rather invest my money on my own than depend on the government. However, the government didn't save the money that they took from the people who are recieving now (of course), so in all reality if the government said they were ending SS, all this would mean is that our tax dollars would still be paying for SS, it would just be officially settled that we would never recieve it.
Your losing your touch there Clemson....you forgot to call me a lazy moron.Originally Posted by clemson357
lazy moronOriginally Posted by min0 lee
I always had this feeling that you and Clemson were on of the same.
Much like Robert is really Doms.
I'd have a lot more postsOriginally Posted by min0 lee
I was like clemson about 15 years ago to my shame.......but I have grown up a bit since then,Originally Posted by min0 lee
You were worse?Originally Posted by ForemanRules
except the smart and good looking part.Originally Posted by ForemanRules
#15Originally Posted by clemson357
In all seriousness, I thought by this point you guys would realize a difference of opinion from a character flaw. Doesn't make much difference either way but....
And most of us hopeed by this point you have would realized that it isn't your opinion that we dislike, but rather your personality that we dislike.Originally Posted by clemson357
Last edited by KelJu; 05-07-2006 at 10:31 PM.
SS is not a wealth creating system. It is a form of social insurance against elderly poverty that should not be subject to the whims of the market and fees of brokers. It's a transgenerational contract/agreement to care for our elderly. No man is an island. A society has needs as does an individual.
Just look at all the privatized systems similar to SS across the world--britain and Chile most notably. They are failing. They are subject to massive fraud and corruption. The benefit amounts paid are hitting shortfalls that cannot be redressed. Market investment has loss implicit in participation. Of course that doesn't even address the cost of private administration (17-22 times that of SS administration) or transition costs (could be over a trillion dollars).
The only people that will benefit absolutely from investing SS funds in the market are the brokers.
That's bad for America.
Social Security should be re-named to:
There will be massive tax increases as the the ratio between those that are working to those that are on S.S. (at 62, 65) tightens up. Right now it's at 3:1
And the tens of millions of boomer that will hit the rolse in the coming years will be getting annual c.o.l.a.s. and they'll be living longer.
I haven't paid into S.S. in 6 years, and I don't plan on paying into it anytime in the future.
It's an accurate statement that our current spending will not be increasing the debt We've stopped spending money that we don't have.
-- Jack Lew, then director of the Office of Management and Budget, in Feb. 16, 2011 testimony before the Senate Budget Committee.
That depends on how the economy performs over the next few decades. Tax raises were comprehended by the creators of SS to meet the ebb and flow of the workforce.Originally Posted by Mr_Snafu
Ronald Reagan took the sensible approach to meeting the projected ebb in worker to beneficiary shortfall and raised the payroll tax. The only problem was that unscrupulous politicians raided the trust fund and left a bunch of Gov. Bonds. The US has never ever defaulted on the payment of US bonds b/c they are supported by the full faith and credit of the US.