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The Problem With Privatizing Social Security...

This is the cliche thinking that I addressed in the article. The Trustees reports say that Social Security isn't excellent or top-notch. They say it is in need of immediate reform. Do you think that they are liars? Do you have any data to support your claim? If you are going to criticize privatizing Social Security you need to elevate your reasoning.

You are repeating the worst and most tired of the cliches. #1 suggests that there is market risk. Well with all of the downs in the stock market the market has outperformed the investment policy of Social Security 50 to 1. The idea of talking about market risk, when the system has a 100% asset concentration in a single security is laughable.

I give you a hard time because the subject deserves more thought than this.

Lets interject some facts. Yep.. social security is in need of reform. that makes sense... tell me any other insurance program that can operate for 70 years without changes? the fact is that social security is solvent for decades at current levels. The reason to act now is that it will have less effect NOW than if we wait until there is a problem. The fact is that WITH NO CHANGES.. the trust fund lasts until 2033 and after that tax income alone will pay for 2/3 benefit until 2087!


After 2020, Treasury will redeem trust fund asset reserves to the extent that program cost exceeds tax revenue and interest earnings until depletion of total trust fund reserves in 2033, the same year projected in last year’s Trustees Report. Thereafter, tax income would be sufficient to pay about three-quarters of scheduled benefits through 2087.

Trustees Report Summary

That's the Trustees report. Are they liars? Do you have any data to support your claim? do you have any data to support the idea that if we privatize social security that everyone would do better than the current system?


You are repeating the worst and most tired of the cliches. #1 suggests that there is market risk. Well with all of the downs in the stock market the market has outperformed the investment policy of Social Security 50 to 1. The idea of talking about market risk, when the system has a 100% asset concentration in a single security is laughable.

Whats laughable is you claiming there is no market risk in the market. Talk about cliché...:doh " the market has outperformed social security"... of course it has... ON AVERAGE... Get it.. on average.... that doesn't mean that everyone who invested in the market has done that well. Many in the market took a bath. go ask the small folks who had retirement in the techmarket, or Enron, or a myriad of other defunct companies.

You are a perfect illustration of why privatizing social security is such an absolutely bad idea... because you don't have a clue how the market works and assume that because on average it does better than a T bill... that its great for everyone.

And your comment about social security versus the market and risk again illustrates a lack of understanding. The average guy.. does not have enough money invested (for a long, long time) to mitigate the risk of the market. That takes about a hundred thousand is about the minimum to mediate your risk in the stock market. However, buying a treasury bond is a way to alleviate that risk. Because its the most stable investment BAR NONE. What it lacks in volatility and (potential profit) it makes up in security. you know.. SOCIAL SECURITY.

Lets discuss what the idea of privatizing social security is really about. Its really about making more profit and more security for wall street. You think the banks were "too big to fail"... you wait until the market has control of social security and a downswing means millions can't buy groceries. You dang sure will see the propping up of Walls street.
 
1 sticking my money in a acount and getting less than 1% intrest would be a better ROI than SS. In fact you can suff your money in a shoe box in your closet and still get a better ROI than SS.

2 wasn't talking about brokers was talking about using the inernet and the tools it has spinner to make your own investment decisions that's what my fater stater doing 10 years ago and that's what I'm starting to do.

3 it wasn't sold to the American people as insurance so why should I think of it that way. Also since congress can change the terms of your pay out after you've joined it's really not insurance either.

1. Depends on how much you make.. the truth is.. if you live longer than your making years... you will NOT even come close to getting a better ROI sticking it in an account... in fact.. you will come out WAY better with social security. Simple fact.

You assume that you will be adding to that amount throughout your lifetime,, but if you live much longer than your retirement age.. you return on investment will be much greater.. AND if you suddenly become disabled at a much younger age.. or lose a job, or say experience a bad economy, such as now.. where many people are drawing down on their retirement accounts.. just to pay the bills..... you will be very, very glad for social security.

2. While I would never discourage anyone from doing more research and trying to learn more about investing in the market... I would like to suggest you think about something... Who do you think is writing all the "investing tools" and information that you are researching? Think about it.. if you had a great idea.. would you share it with the WORLD, and then reduce your own profit? A lot of the research and tools that you are describing on the internet are done by folks that want to convince you to invest in a certain way. Go to Vegas and see the number of folks teaching you "the SYSTEM" to gamble... its exactly the same thing.

Now, if you are convinced you want to be in the market? Well, I think discount internet trading is a way to go.. especially if you don't have enough or trade enough to get a managed account. (I think 100,000 is about the minimum). Frankly, unless you are already wealthy, if you want to build wealth, you should not be in the market except for long range retirement. You should be focusing on debt reduction and getting a down payment for a house purchase.

3. Insurance companies certainly change the terms of payout over the years. Its just a different type of insurance. I have had a health insurance policy for 20 years with the same company.. you don't think the terms have changed over the years?
 
I imagine most people who elect SS at 62 didn't have much of an option.

Everything looks like a nail when the only thing in the toolbox is a hammer. Social Security is available for people who want to retire early. It is not a sound option to have.
 
1. Depends on how much you make.. the truth is.. if you live longer than your making years... you will NOT even come close to getting a better ROI sticking it in an account... in fact.. you will come out WAY better with social security. Simple fact.

Your idea of facts and Webster's seem to have a difference. The Social Security Administration do not say that you will come out better, much less way better. They say on average he is losing money in the system.

If you have any documentation on your statement please share it with us.
 
Lets interject some facts. Yep.. social security is in need of reform. that makes sense... tell me any other insurance program that can operate for 70 years without changes? the fact is that social security is solvent for decades at current levels. The reason to act now is that it will have less effect NOW than if we wait until there is a problem. The fact is that WITH NO CHANGES.. the trust fund lasts until 2033 and after that tax income alone will pay for 2/3 benefit until 2087!

You do not even understand what you are quoting in all CAPs no less. Social Security was insolvent in 1983, so let's not pretend that it hasn't had massive changes already.

The Trustees information that you have quoted isn't a prediction much less a guarantee. They say that in A GOOD ECONOMY Social Security might be able to pay full benefits until 2033.

The fact is that WITH NO CHANGES.. the trust fund lasts until 2033 and after that tax income alone will pay for 2/3 benefit until 2087!

If you had read the document that you are quoting you would have found on page 58, it says that the system might also be dry in 2027.

The Trustees have provided this information as a warning not a guarantee of success.
 
It's still just semantics. You can call it a safety net and I can call it a retirement account but it will still be whatever it is. It's money you can access when you reach a certain age, nothing more

With all due respect.. its very much different. In a retirement account.. you don't get back more than you put in... in social security.. than can happen. just like you may get car insurance tomorrow and total your vehicle the next day and get a full payout... or you may pay for years and years and never need a pay out.

Social security is a safety net based on an insurance model. That's that only way it can work as a safety net.

Did I say anything about congress keeping its hands off it? That was the poster I responded to, not me. I said that congress could limit the types of investment vehicles allowee to keep these accounts from going speculative
Well and that's the issue.. there is nothing to prevent congress from down the road pushing vehicles that become speculative. They have already proven that they can't manage the countries finances.. I don't think it makes sense to turn them loose deciding what investments I can or not make. The fact is that despite an inept Congress.. social security has been racking up surpluses for decades and is solvent for decades and up to 2087 on 2/3 benefit without changes. That's a pretty dang successful program by any fiscal measure.

And we are going to privatize it for what? Remember the housing bubble? that was in part created because people were investing in "mortgage backed securities".. which at the time.. were considered very safe and smart investments because they were backed by real property.... OOOOPS...

As far as belated posts.. sorry about that.. they are so many posts on here that when I get back to the computer, I often miss responses since they are pages old...:3oops:
 
And where would you get the cash for this bonanza? It is unrealistic to suggest that you can make those 64 and older whole. Now you want to give cash to everyone.

Who says I am giving cash to everyone? A person who fully divests from Social Security will have paid 10+ years in and get 0 out.
 
Trustees Report Summary

That's the Trustees report. Are they liars? Do you have any data to support your claim? do you have any data to support the idea that if we privatize social security that everyone would do better than the current system?

I don't suggest the Trustees are liars. I am pointing out that you haven't actually read the report, and what little you have is either beyond your grasp or you are intentionally misleading people.

The Trustees do not provide any guarantees. They look at probably outcomes. It is probable that IN A GOOD ECONOMY AND GIVEN PATIENT VOTERS Social Security will blah, blah, blah. If you think that the Trustees have said that Social Security is solvent for decades, let's remember the words of Jimmy Carter who said that the legistlation of 1977 would GUARANTEE the solvency of Social Security until 2030. It was completely insolvent in 6 years later in 1983.
 
Social security is a safety net based on an insurance model. That's that only way it can work as a safety net.

So you can explain why so many Americans are ineligible for the "safety-net", and if it is a 'safety-net' why is it that not one penny of benefit is based on need.
 
Your idea of facts and Webster's seem to have a difference. The Social Security Administration do not say that you will come out better, much less way better. They say on average he is losing money in the system.

If you have any documentation on your statement please share it with us.

My facts are right... how about you come to my clinic and explain it to may 23 year old paraplegic patient how he is going to do worse, now that he is getting his social security.

Then you can explain it to my 95 year old patient that's been retired for thirty years (after being a manual laborer) and now is only living on social security as he has played out all other investments. You explain to him how he would be better off with the money that he sent to social security.

Now.. if the 23 year old dies at 65.. yeah.. he is going to lose money on average.

And here is a funny thing... its because on AVERAGE you lose money on the deal.. why it pays for itself. If we were all making money on the deal,, and all getting back more than we put in.. then it would not run a surplus would it. That's why its insurance, that's why its a safety net.

but the facts are that

•Social Security provided at least half the income for 65 percent of the aged beneficiaries in 2010

Now.. for guys like me.. its probably a losing proposition.. UNLESS I get disabled or a myriad of other things that can happen in ones lifetime.
 
The Social Security debate contains a lot of noise, where people argue in great earnest with the worst of cliches. Arguments are repeated over and over until people accept them out of volume rather than reason.

The idea to privatize Social Security deserves more consideration than it gets from either side. Opponents - with a straight face - will warn you about the risk of the stock market, when the money today sits in a system that is insolvent by any measure of the insurance industry. Proponents - with equal ardor - will promise you that a privatized Social Security system would create a pool of capital on which the economy will grow as though Social Security would be a magical money tree.

Um....no, not magic...investment.

Before we replace, the eggs with sausage, someone should ask why is it that a new Social Security will perform the job of accumulating wealth better than the savings programs that we already have, and already subsidized. Virtually every American has access to personal savings accounts. They may be 401Ks, IRAs, brokerage accounts. If savings accounts with tax incentives are not getting the job done, how is throwing more money at them going to work any better?

Well, you make an assumption that just isn't true. Most people don't have 401Ks or IRAs. They rely solely on Social Security. They are under the impression it will be enough.
Study shows most Americans have inadequate savings - World Socialist Web Site

This is what happens when you tax everyone for anything they do. Plus, everyone has multiple cell phones, high speed internet, 5,000 tv channels and at least 3 flat screens, 2 tablets, a lap top or two and several ipods. Add it all up, and savings aren't possible for most.
 
Um....no, not magic...investment.

Invest what? Social Security has about 2.7 trillion in cash and about 26 trillion of liabilities held against that reserve. It is magic if you think you will generate 23 trillion in wealth.
 
My facts are right... how about you come to my clinic and explain it to may 23 year old paraplegic patient how he is going to do worse, now that he is getting his social security.

Then you can explain it to my 95 year old patient that's been retired for thirty years (after being a manual laborer) and now is only living on social security as he has played out all other investments. You explain to him how he would be better off with the money that he sent to social security.

Now.. if the 23 year old dies at 65.. yeah.. he is going to lose money on average.

And here is a funny thing... its because on AVERAGE you lose money on the deal.. why it pays for itself. If we were all making money on the deal,, and all getting back more than we put in.. then it would not run a surplus would it. That's why its insurance, that's why its a safety net.

but the facts are that



Now.. for guys like me.. its probably a losing proposition.. UNLESS I get disabled or a myriad of other things that can happen in ones lifetime.

We don't have any facts. We have your word. The Urban Institute says that you are wrong, and so does the SSA's moneys-worths studies.

Of course they measure the return on insurance correctly, which includes the possibility of getting nothing.
 
Invest what? Social Security has about 2.7 trillion in cash and about 26 trillion of liabilities held against that reserve. It is magic if you think you will generate 23 trillion in wealth.

What is the unfunded liability of the DoD? You see, when it's convenient using accrual accounting versus cash accounting principles the argument can go in many different directions...
 
You do not even understand what you are quoting in all CAPs no less. Social Security was insolvent in 1983, so let's not pretend that it hasn't had massive changes already.

The Trustees information that you have quoted isn't a prediction much less a guarantee. They say that in A GOOD ECONOMY Social Security might be able to pay full benefits until 2033.



If you had read the document that you are quoting you would have found on page 58, it says that the system might also be dry in 2027.

The Trustees have provided this information as a warning not a guarantee of success.

What.. you are saying that it was insolvent.. and then became solvent again? Golly gee... how could that possible happen... Duh.. that's the point... things looked bleak in 83 and then we were running surpluses up to 2010. So lets not pretend that the expectation is that social security should never need to be updated.

Oh no.. I very much understand what you are quoting... I don't think you understand what you are stating...

Did you not bring up the Trustees position that social security needed to be changed? "are they liars" I believe you asked... Well, their prediction on needed to change social security is based on the SAME LONG TERM PREDICTION...

You apparently are fine with using the Trustee report when you attempt to skew the information your way.. but don't like all the facts being told.

Yep.. the system might be dry in 2027... it also might be fine.. that's the problem with predictions...

However, the social security Administration has come up with a variety of alternatives that will increase the solvency of the social security system... I have already posted them ad nauseum...

How about you post exactly how privatizing social security would work and provide concrete numbers on how every individual.. especially the most vulnerable in society.. will benefit more than the current system.
 
We don't have any facts. We have your word. The Urban Institute says that you are wrong, and so does the SSA's moneys-worths studies.

Of course they measure the return on insurance correctly, which includes the possibility of getting nothing.

My word is better than yours quite frankly. Ho about you post the "urban institute" report and I will point out your error...

The fact is that 65% of elderly have social security as their only income..and stating that all those folks would be better if they put the money into a shoe box, or tried to figure out what investment they should make... you are completely nuts.

the urban institute doesn't say I am wrong and neither does SSA money's worth studies... You simply can't understand what I am saying which is that its insurance.. and its a safety net. and that while on AVERAGE.. someone might not do as well.. if they fall below that AVERAGE.. then it very much is a benefit.. very much.

And that number is skewed toward more people because higher incomes skew that average up.
 
Everyone will leave. So how will you pay the existing retirees?

Age 46 to 65 would be excluded from the divestment. Twenty somethings are on the low end of the earning spectrum so the actual hit to SS in year one would be 3% or less even if there is a 100% buy in from everyone eligible, but likely that would be a lot less.

Any short fall that can't be covered by minor adjustments to benefits can be explained to the recipients that we already spent that money on them when they raided the trust fund. :cool:
 
Age 46 to 65 would be excluded from the divestment. Twenty somethings are on the low end of the earning spectrum so the actual hit to SS in year one would be 3% or less even if there is a 100% buy in from everyone eligible, but likely that would be a lot less.

Any short fall that can't be covered by minor adjustments to benefits can be explained to the recipients that we already spent that money on them when they raided the trust fund. :cool:

Today with everyone paying 12.4%, not anyone leaving the system, Social Security cannot pay full benefits to anyone 64 or younger. Any money that is removed will only mean that the collapse happens faster. If we do not have a good economy, the collapse happens faster. The Trustees provide estimates which say that the system will not be able to pay full benefits to someone 72 today. Those 47 and younger today do not expect to ever collect full benefits. So without a massive tax increase there we will not be able to achieve even a baseline of your model.

I don't sense you realize the depth of the problem.
 
What is the unfunded liability of the DoD? You see, when it's convenient using accrual accounting versus cash accounting principles the argument can go in many different directions...

The comparison with DoD suggests that you aren't familiar with the operations of Social Security. Social Security gets revenue from a dedicate revenue stream. It is suppose to be a contributory benefits system. DoD is funded from the general fund by appropriation. Instead of turning Social Security into a welfare program. Why don't you suggest increasing the funding of actual welfare programs.
 
Social Security History



FACT CHECK: Social Security adds to budget deficit

" The Facts: Social Security's shortfalls are adding to the federal budget deficit, in a roundabout way. One big reason: The rest of the government has been running such huge deficits over the years that it has spent all of the surpluses accumulated by Social Security.





Here's how it works: For nearly three decades Social Security produced big surpluses, collecting more in taxes than it paid in benefits. The government, however, spent that money on other programs, reducing the amount it had to borrow from the public, including foreign investors. That's why some advocates complain that Congress has "raided" Social Security.

In return, the Treasury Department issued special bonds to Social Security. The bonds are now valued at $2.7 trillion. They are accounted for in two Social Security trust funds, one for the retirement program and one for the disability program.

The bonds pay interest like other Treasury notes and are backed by the full faith and credit of the U.S. government.

Social Security is now spending a portion of the interest because it needs cash to cover monthly benefit payments. This year Social Security is projected to pay $789 billion in benefits and administrative costs and collect $623 billion in payroll taxes and taxes on benefits, a shortfall of $166 billion.

About $112 billion of the shortfall is from a temporary reduction in the payroll tax that is scheduled to expire in January. There is no question that money adds to the budget deficit because Congress financed the tax cut through borrowing.

The rest of this year's shortfall, about $54 billion, will be financed by the interest payments. Social Security's trust funds are projected to earn about $110 billion in interest this year.

Until recently, the interest payments were an accounting device, with one part of the government crediting an account held by another part of the government. As interest accumulated, Social Security's trust funds grew on paper but no money changed hands because the program had plenty of cash from payroll taxes to pay benefits.

Now that Social Security needs money from the interest payments to cover monthly benefits, the cash has to come from somewhere."If you don't have the cash to pay for it, then you have to borrow that money from China or you have to raise taxes," Gregg said. "Those are the only two options."

Becerra, however, said it is wrong to blame Social Security for adding to the budget deficit when it is simply spending money generated by its investments. That's like blaming bondholders for expecting to be repaid, he said.

"If we don't owe Social Security – Americans who paid into it – then we don't owe the foreigners either," Becerra said. "
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These special bonds issued to Social Security should be retro-actively adjusted for inflation.

Government deficit spending is 100% responsible for inflation and devaluing the dollar. Devaluing the Social Security Trust Fund! Not fair!

Fix the devaluation in respect to social Security and ONLY to Social Security, and you fix SS forever! :D


It's easy to do. Interest to Social security bonds should be the current T-bill rate PLUS the inflation rate experience over previous 10 years. Still not toatally recuperative, but it would save Social security, and THAT would be fair!
 
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DollarTimes.com | Inflation Calculator

"$1.00 in 2013 had the same buying power as $0.79 in 2003.

Annual inflation over this period was 2.41%."


How much interest does the government pay SS?

Social Security Interest Rates


To be fair, since we don't get to chose to buy govt bonds like investors do, congress simply takes the money, pays whatever interest they like, and then claim SS is broke.

NO NO!

Pay social security 25% interest.

the 4% they- claim they are paying, and the 21% those dollars in the trust lost just in the past 10 years due to deficit spending and printing fiat dollars.

Email your representatives this is what is fair and what you demand!
 

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Credit cards are expensive interest. So should raiding social security be damned expensive interest!

Use presidential and congressional pensions to defray part of this interest.

They steal from our social security and then get handsome pensions and medical care? Throw the bums OUT!
 
Fix the devaluation in respect to social Security and ONLY to Social Security, and you fix SS forever! :D[/B]

It's easy to do. Interest to Social security bonds should be the current T-bill rate PLUS the inflation rate experience over previous 10 years. Still not toatally recuperative, but it would save Social security, and THAT would be fair!

Are you aware that the Trust Fund has done substantially better over the last 30 years than current t-bill plus inflation?
 
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