Want privatized Social Security?

[auburngrad82]

From Forbes:

http://www.forbes.com/personalfinance/retirement/2004/11/16/cx_da_1116topnews.html

Pension Agency Doubles Its Troubles

NEW YORK - For younger workers not near or at retirement, the woes of the U.S. Social Security system tend to have a distant, if not surreal quality. While the prospects of Social Security continue to wane, there is some indication that, as a political issue, Social Security has faded, and that a looming private pension crisis is well off the map.

For the second year running, the Pension Benefit Guaranty Corp., the federal agency that guarantees private pensions, said its long-term deficit more than doubled due to a surge in busted pension plans. Last year, the deficit between the agency's investment assets and its liabilities was 11.2 billion, and nothing was done to improve matters. This year the deficit stands at $23.3 billion, and once again there are calls to action.

[MrUnderhill]

1. Personally? Sure!

Collectively? Not a chance.
I doubt the "average" person would end up with a better result.


But I'd trade away all of my future benefits right now in exchange for letting me have half of my Social Security tax placed in a tax-deferred savings vehicle of my choice (plus disability/ death coverage).

[denverbill]

2. Wanna know the shitty part of all this?

The chief honchos at many of these companies awarded themselves guaranteed pensions, separate from these funds.

So the guys make millions of dollars a year in salary, enough, one would think, to fund their own retirement generously, also gave themselves guaranteed pensions, while at the same time underfunding the benefits of their workers.

[nodictators]

3. Forbes is NOT a good source for unbiased facts

Interest in Social Security shouldn't be waning. Bush wants to partially privitize it and cut the benefits by at least 40%. The CBO evaluated his plan and said it would be a cut or $500/month for the average individual retiree. That's a huge hit on seniors.

Plus, the Bush double-whanny is a 23% or more sales tax to replace the income tax. It's also double taxation on people with savings.

Sure the pension plans are in trouble. That's because the Repubs allowed corporations to underfund their pension plans. Now, the chickens are coming home to roost.

[auburngrad82]

5. The point is, if we allow SS to be privatized, then how do you protect the

people that depend on the income for retirement? I have a 401k but many people don't. Many people don't even have a savings account. Social Security is just that, security so that when a person retires he or she doesn't have to worry about the daily cost of living, ie food and shelter. One of the biggest benefits of the Social Security system for most people is that they live longer now than they did when old people lived in poverty or depended on their families to take care of them (ie, before Social Security). They are more independent and self-sufficient and less of a burden on their families, their communities, and their government.

The organization that is supposed to guarantee private (and privatized?) retirement funds is going broke, so what happens if your social security is invested in stocks and there is a market crash? You lose what you have invested. If you are close to retirement or already retired, you probably cannot afford to wait and hope that you recoup your losses when the market recovers.

I have a friend that is nearing retirement. When the stock market dropped so drastically in 2001 he lost most of his retirement, which was in the stock market. Then he had to use what was left to pay his employees and keep his business running. He and his wife have given up on ever being able to retire. If social security is allowed to be invested in the stock market this could happen to literally millions of people like my friend.

[KansDem]

4. This is an unfair assessment...

Forbes should know better than to print something like this...

But, at least according to the exit polls following the presidential election, Social Security is less of an issue than in recent years. In 2000, 14% of those polled said Social Security was the most important issue, and another 7% pointed to Medicare and prescription drugs. This year, neither Social Security nor Medicare was among the top seven issues.

It was not among the "top seven issues" in 2004 because privatizing SS was not in the political debate this campaign season. In 2000, it was, and made an appearance in the "debates" (remember when Bush said he would like to privatize some part of SS? Remember Gore's "lockbox?"); not so in 2004.

I'll guarantee, however, that if Bush threatens privatization, it will be an issue in 2008...

[greenohio]

6. This issue kills us with the x-gen

SS is in trouble and we have no reasonable ideas on how to fix it.

[auburngrad82]

7. Read "Had Enough? : A Handbook for Fighting Back"

by James Carville. He had a very practical idea on how to save Social Security. I seem to remember is was something as simple as put the money in the bank and draw interest rather than just leaving it to sit and gather dust. The interest that could be earned on the money would offset the expected difference in payouts vs SS taxes and increase the life expectancy of Social Security by about 100 years.

[robcon]

8. Carville's plan is unrealistic, IMO.

The problem is that the vast majority of FICA funds collected this year are paid out this year to retirees. This will bite us in the ass, when people like me (post WWII baby boomers) retire: there will be too few people earning FICA to afford the vast number of retirees.

The short term solution should be to extend the FICA tax on all income, (not just wages and salaries) or, alternatively, on earned income beyond the current limits.

The long term solution is to have a fund, not a pay-as-you-go system... i.e. like the Chilean system: partially privatized pension funds.