Should We Have More Control Over Our Social Security Funds?

[1123581321]

What to do, what to do?

I say give more choices, that way people can do what they want with the money that they own. Example, offer accounts or the regular system, and if too many people choose the accounts to keep the SS system as we know it afloat, then kill it (the current system), remember, majority rules. If almost no one uses private accounts, then it won't make much difference. Personally, i would put my money somewhere where it would get comopounding interest or something like that, not social security, because in SS you can't even pick where you want the money to go, and how much, the government does that for you. I think galvestion, TX has a system like that, and from what i hear it does quite well.
Just some food for thought.

Fibonacci

 

[BobG]

<mercy post - someone has to reply> :rofl:

It would seem the majority of people would prefer to keep Social Security as it is. One reason? It's probably too late for a change to fix the problem for baby boomers. Considering the huge voting power the baby boom generation holds, a better solution for them will be to vote higher payroll taxes on the younger generation (anyone under the age of 40 - geez, is this the same generation that didn't trust anyone over 30?).

I think they're ignoring the impact of the entire baby boom generation cashing in their 401k's and IRA's and the huge sucking of capital out of the stock market. A strategy that would at least protect their private accounts would probably serve both generations a little better.

 

[SOS2008]

In all fairness to the Fibster, I meant to let him know that there was an earlier thread on the topic, so no doubt many members are tuckered out. Bush's recent speech and more details however may well justify more conversation. When I have more time I plan to revisit this thread.

 

[Astronuc]

I have to agree with Bush administration on the indexing idea, and I am one of those who would lose out on SS payments. But then I have a 401K which is looking pretty good.

There are problems with privatizing accounts - what happens is one's investments go bust?

In one of my 401K's, I have restricted access. So I followed some advice and allowed a 'diversification' of the portfolio. However, what went up was offset by what went down. I finally had enough and parked everything in a fixed income fund - but with low interest. On the other hand, whereas I was watching the 401K drop before, it's gained about 5% per year since I changed it.

It takes some effort on the part of the investor, or some luck or some good inside information (and there is a lot of that) to get high yields.

The way the economy is structure in this country (heavily weighted to consumption and services), the actual wealth creation is pretty poor. Much of the wealth (e.g. stocks) is virtual (and the NASDAQ is still down about 60% from its high a few years ago).

I think they're ignoring the impact of the entire baby boom generation cashing in their 401k's and IRA's and the huge sucking of capital out of the stock market.

It may not come out all at once. Also many 401 K's allow changes withint he plan to move out of equities into less risky investments like bonds or Treasury notes.

Anyway, I probably will never retire - there is way too much to do!

 

[wasteofo2]

Moving to Canada sounds like the best idea to me at this point...

 

[SOS2008]

I have to agree with Bush administration on the indexing idea, and I am one of those who would lose out on SS payments.

The debate is how the indexing is done--problematic.

There are problems with privatizing accounts - what happens is one's investments go bust?

The following was from the previous thread (can't remember who posted some of this):

So you think that at least with privatization the money will be yours? Under the details that Bush has given so far, when you go to collect, the government will remove from the account all principal investment, the money it would have made in treasury bonds, and one of the heftiest fees in the investment industry.* What's left is yours. Based on historical stock market returns, it will not be much.

*For a broker who would be managing all these "little" accounts it would just clutter up his real work on larger investments--these would not be high on a fund manager's agenda in terms of ensuring good investments (not worth their while in commissions) and the brokerage firm would still charge a brokerage fee that benefits the company but not the individual broker (i.e., no incentive to tailor and refine the investments regularly to ensure good returns).

To clarify, the government will take the account principal, interest and fees from what you receive; it will not appear to leave your account until you try to collect.

In addition, it is a plan that is controlled by the government (you know, the same government that has been managing Social Security) and that will benefit large corporations associated with Wall Street (think Enron, Halliburton).

But then I have a 401K which is looking pretty good.

So why not do the 401K instead of a "private account," and you usually get a company match, and contributions are deducted before income tax is applied? But wouldn't you like a guaranteed SS check along with what ever your 401K provides you--just to be sure? I know one individual currently on SS who has lost about $30,000 in stocks during retirement so far. It's a good thing this isn't the only income she has to depend on.

The way the economy is structured in this country (heavily weighted to consumption and services), the actual wealth creation is pretty poor. Much of the wealth (e.g. stocks) is virtual (and the NASDAQ is still down about 60% from its high a few years ago).

In addition, money directed into the stock market does not create jobs.

And there is the matter of transition. Privatization diverts Social Security taxes used to pay current benefits into private accounts. Without that money, Social Security benefits will inevitably be cut -- up to 46 percent for future retirees. So how much will you lose? You may go to http://democrats.senate.gov/ss/calc.html to find out... (calculations are based on Congressional Budget Office economic assumptions).

Because current Social Security taxes would be used to pay for private accounts, taking that money out also will mean huge deficits -- as high as $15 trillion over the next 40 years.

But wait... from CNN:

http://www.moveon.org/lte/lte.html?lte_campaign_id=17&zip=85284&id=5123-5389058-mjuiihhiENDWzjyj9dfjvg

JOHNS: It's Drexel University in Philadelphia, day two of a week-long Social Security state tour by Republican senator Rick Santorum, pitchman for the president's plan. College Republicans show up to support him. They're trying to persuade people that there is a genuine crisis in Social Security and that the program needs to be modernized to survive. But at one point, it sounds more like they want to scrap it.

CROWD: Hey, hey, ho, ho, Social Security's got to go!

JOHNS: Not exactly the message the president is trying to send.

Or is it? The Republican Party opposed Social Security when it started. In the meeting, Santorum, the leading supporter of privatization in the Senate, declared that "it is time for a Republican solution to Social Security." But the Republicans gathered outside were more clear about where that plan ultimately leads. For Bush's conservative base, privatization of Social Security is just the first step toward getting rid of the program entirely.

There are many other factors to consider as well. It's not just retirement income, but also cost of living, and most importantly debt carried by future generations. The younger generation that this concept is targeted to live beyond their means with poor spending habits, large credit card debt, no savings, and will they own their homes? Not if they keep taking out lines of credit--many are upside down on their mortgage obligations.

Social Security is a form of insurance, and deals with disabilities and other needs in addition to retirement. With that said, Bush made a big point about the loss of a spouse and loss of their SS benefits when they die. I'd like to see what others think before sharing my thought on this.

 

[SOS2008]

Moving to Canada sounds like the best idea to me at this point...

Better save up. Canada won't let you in without a lot of assets--or maybe you can get a company to sponsor you or Canadian citizen to marry you?

 

[Pengwuino]

All the girls i talk to from Canada act like sl...#@*(...uts... probably want you to pay them if you want to get marrid to them.

 

[Pengwuino]

It would seem the majority of people would prefer to keep Social Security as it is. One reason? It's probably too late for a change to fix the problem for baby boomers. Considering the huge voting power the baby boom generation holds, a better solution for them will be to vote higher payroll taxes on the younger generation (anyone under the age of 40 - geez, is this the same generation that didn't trust anyone over 30?).

I think they're ignoring the impact of the entire baby boom generation cashing in their 401k's and IRA's and the huge sucking of capital out of the stock market. A strategy that would at least protect their private accounts would probably serve both generations a little better.

Most people, according to "polls", show that people want social security form. The next part though is about 5000% correct. The world is run by your electorate, not math or logic or fairness.

The last part though i disagree on. A large amount of the 'baby boomer' generation does have 401k's and IRA's but a larger % of the newer generations probably invested in teh same market tools which will make up for the large # of baby boomers leaving the stock market. The more educated generations get on investing and 401ks and the stock market and such, the more of a % of them will actually do it.

I think they need to progressively cut benefits based on a % of the cost of living index used and freeze social securities funds from grimmy little senators hands :D. I don't trust raising taxes because i know they would just pile it on the upper salaries (which a large amount are small businesses and people who worked their asses off for the money).

 

[loseyourname]

Moving to Canada sounds like the best idea to me at this point...

Dude, you're 17. If you invest $50 a month in a good long-term portfolio, increasing the amount as you begin to have a real income, you can retire a millionaire. Forget social security.

 

[Astronuc]

I know one individual currently on SS who has lost about $30,000 in stocks during retirement so far.

That is why it is important to move one's retirement out of volatile equities into something more secure, e.g. bonds or CD's, or one has to pick some stable equities (stock). The more secure (i.e. less risk) investments generally have lower rate of return, but they do not necessarily lose value as can happen with stocks.

Also when investing in stocks, it is wise to look at fundamentals like dividend yields, net profit, operating margin and price-earnings (PE) ratio, i.e. do some research, otherwise one is merely speculating/gambling.

As for the privitization, I don't know all the details, but from you posted, it doesn't seem all the beneficial. I am cynical in such matters, but it seems, as many critics point out, that the Bush administration is simply helping the financial/investment community get their hands on an unsuspecting public's money.

 

[ptex]

Seems like two options:
1. The government controls the money that you pay into SS
2. You get to control the money you pay

I like option #2, I think that I trust myself more then someone I don't even know. At my age even if I put the money in a coffee can and buried it in the back yard I think that I would have more money when it comes time to retire. How does it work in Chile? Or any other country that let's its citizens have privatized accounts? I have a friend that lives and is from Chile and he likes it. At least let me choose to do it or not and at what % that’s democracy. The whole thing sounds socialistic to me anyway I mean someone is relying on me to work to make up for the fact that they did not want to work and save at this point that’s BS to me. I guess that if you want the government to spend your money as they see fit move to Canada we’ll see you when you are in dire need of medical attention and you come back state side to get it unless of course you are relying on others to pay into the government for survival then you’ll just have to wait until they can get to you. Sorry about the slightly off subject rant. Anyway for now I guess that I can keep giving away my money with no real expectation in ever seeing it again.

 

[Pengwuino]

As for the privitization, I don't know all the details, but from you posted, it doesn't seem all the beneficial. I am cynical in such matters, but it seems, as many critics point out, that the Bush administration is simply helping the financial/investment community get their hands on an unsuspecting public's money.

Well buzz words like 'unsuspecting' are kind of a joke. Anyone who watches the news realizes the money woudl go into the stock market. And does it really matter if we are historically guaranteed a higher rate of return on our money?

 

[SOS2008]

Most people, according to "polls", show that people want social security form.

http://www.gallup.com/poll/content/default.aspx?ci=16045

The data on Social Security simply don't look great for the president. Bush's job approval rating on handling Social Security remains considerably lower than his overall rating. One recent question that asked Americans about a Social Security privatization plan found that opponents outnumbered supporters by almost 2-to-1. But regardless of how the question is asked, most polls show declining support for the concept. Furthermore, about half of Americans believe that Bush is attempting to dismantle the Social Security system.

We see an interesting paradox of sorts when we attempt to get a fix on the priority that Americans attach to Social Security reform. Social Security scores relatively low when embedded in a list of issues that Congress and the president could tackle -- coming in below terrorism, healthcare costs, gas prices, and the economy. At the same time, 6 in 10 Americans say political leaders are moving too slowly to take up legislation that would address the Social Security system's ills.

The upshot here is that although Americans have accepted the idea that Social Security has problems (indeed, recent Gallup polling shows that relatively few working Americans expect Social Security to be a major part of their retirement income), the Bush administration has not convinced the public that private investment accounts are the way to fix them. The current downward trend in the Dow probably isn't helping matters.

Why not invest yourself? Why trust the government with your funds while paying large fees for this benefit? Private accounts will not be guaranteed. What if people's accounts go bust? Will they then look to other social programs, such as welfare, food stamps, etc. -- programs they did not pay into? Why should the taxpayers possibly have to pick up this tab in the future?

I think they need to progressively cut benefits based on a % of the cost of living index used and freeze social securities funds from grimmy little senators hands :D. I don't trust raising taxes because i know they would just pile it on the upper salaries (which a large amount are small businesses and people who worked their asses off for the money).

http://www.cbpp.org/12-17-04socsec.htm

This proposal is sometimes referred to, in shorthand, as a proposal to change the Social Security benefit structure from “wage indexing” to “price indexing.” In reality, the proposal would maintain wage indexing, but would change the Social Security benefit formula by lowering the program’s “replacement rates” by the difference between wage growth and price growth.

The President’s Social Security Commission may have adopted this proposal in part because certain other Social Security benefit reductions are strongly opposed by large majorities of the population, such as increases in the age at which workers can retire and draw full Social Security benefits and reductions in the annual cost-of-living adjustment. During the Commission’s deliberations in 2001, some Commission members reportedly were attracted to the idea of “replacing wage indexing with price indexing” because this change would reduce Social Security benefit expenditures so substantially that other, better-understood, unpopular benefit cuts would not be needed.

Many Social Security experts believe there are better and fairer ways to restore long-term solvency to Social Security than to adopt this harsh change.

The index concept would be better than the present cap that is in place, however I feel it should be based on wages, not prices.

Here's a concept. What if our government quit spending SS surpluses (on wars, etc.), and instead placed these funds ("trust fund") into zero/low risk CDs, bill, and bonds that we all could benefit from in our old age? And then if people want to take more risk with their money via 401Ks or what have you, they can choose to do so. And what if the government provided incentives for owning a home, and saving instead of using credit cards, etc. Oh wait a minute, that wouldn't be in the best interest of big business or a boost to Wallstreet.

 

[Pengwuino]

Lol what the crap did i write. I hope you realized i meant most people want social security reform.

http://www.iop.harvard.edu/pdfs/survey/spring_poll_2005_release.pdf

But your quote from that website does prove my point. Most people believe there's a problem and agree reforms need to be made.

 

[Huckleberry]

The way current trends in population growth are going in the United States I don't see a way that Social Security will provide enough income for an older person to survive without additional income.
I recently saw some statistics that claimed that at the beginning of the social security program there were 12 people paying into it for every 1 that collected. Now there are 3 people putting in for every 1 collecting. This is due to the decreased birth rate since the baby boomer generation. As the baby boomer generation becomes eligible for social security then this ratio will be even closer to 1. There must be reduction in benefits or an increase in taxes. More than likely we will see both. (Just remember where I heard this. It was Dave Foley in a commercial on some poker championship television show. Take it for what its worth. Isn't he Canadian anyway?)

Investments are complicated. It's difficult to get a competitive interest rate from a bank that can keep up with inflation. Stock investments can be a gamble. And real estate prices are increasing at an alarming rate. Real estate seems to be the best investment at the time with returns of about 7% or more per year in some places. In the last ten years where I live the price of houses has doubled. Many people can not afford to purchase real estate. It will take wise money management for the younger people of the U.S. to secure financial stability for themselves in the future.

 

[SOS2008]

The way current trends in population growth are going in the United States I don't see a way that Social Security will provide enough income for an older person to survive without additional income.

So true - I think the average SS check is about $900. But it is a guaranteed income in addition to what ever else people choose to do.

There must be reduction in benefits or an increase in taxes. More than likely we will see both.

People are arguing this regardless of your source. It is said that if we remove Bush's tax cuts, SS could be made solvent, and of course the idea of indexing so that the wealthy pay a larger percentage (but based on wages, not prices).

Investments are complicated. It's difficult to get a competitive interest rate from a bank that can keep up with inflation. Stock investments can be a gamble. And real estate prices are increasing at an alarming rate. Real estate seems to be the best investment at the time with returns of about 7% or more per year in some places. In the last ten years where I live the price of houses has doubled. Many people can not afford to purchase real estate. It will take wise money management for the younger people of the U.S. to secure financial stability for themselves in the future.

All the more reason they should have something that is guaranteed. Why do you suppose older Americans above the age of 55 who would be guaranteed SS benefits are not in favor of privitization?