LAT: Cracking the Nest-Egg Problem (SS more for insurance or savings?)

[DeepModem Mom]

Cracking the Nest-Egg Problem
A fundamental question colors the debate over Bush's personal-account plan: Is Social Security intended more for savings or for insurance?

By Warren Vieth and Joel Havemann, Times Staff Writers


HOPKINSVILLE, Ky. — As President Bush tours the country to promote his Social Security restructuring proposal, he has taken to describing the sizable nest eggs he says workers could accumulate if Congress would only let them put part of their payroll taxes in personal investment accounts.

"Right now, when we collect your money … you'll be displeased to know you get about a 1.8% return on your money, which is a pitiful rate of return," Bush said Thursday in Hopkinsville, Ky., the 33rd stop on a Social Security barnstorming tour that began in March. "It doesn't take much to get a better rate of return than the government gets for you now."

Yet in the view of Bush's political opponents, his sales pitch is based on a false comparison between social insurance programs and retirement savings accounts, as well as assumptions about future investment returns that may prove unrealistic.

"The sort of support provided by Social Security is really hard to replace in the private sector," said Kenneth Apfel, Social Security commissioner during President Clinton's second term....

***

"If you're a 20-year-old making $8 an hour … you'll end up with a nest egg of $100,000 when you're 63," Bush said Thursday. "If you're a police officer and a nurse … when you retire, both of you will have a combined nest egg of $669,000."...


http://www.latimes.com/news/nationworld/nation/la-na-social3jun03,0,6936864.story?coll=la-home-nation

[htuttle]

1. So if a person had invested in a Dow Index fund of some kind in 2001

...they would have made far less than 1.8%. In fact, they would have lost money.

That must be the sort of business acumen that Bush used at Harkin and Arbusto...

[central scrutinizer]

2. My savings account currently pays 0.26%

At that rate my money will double in a mere 266 years. Where do I sign up for that 1.8%?

[ZR2]

5. ING Direct pays 3% and Emigrant Direct pays 3.25%

on standard savings accounts. I use both and they are very easy to set up and transfer money.

[Iowa]

12. Bush says SS earns only 1.8%? I don't believe it!

I suspect the little weasel is lying again. Even 3 month treasury bills are paying 3% today! And long term treasuries are paying 4.3%. If the return on the funds in the SS trust fund is truly only 1.8%, it's occurring under the chimp's watch, and he should be held accountable for gross mismanagement. He is such a dumb ass!

[SeekerofTruth]

3. So what should it be?

Originally it was designed as an insurance for retired people. But more and more people just use it as there one and only retirement plan. I don't think the DLC is getting this message (or many messages) out to the public that it's an insurance policy, not a retirement policy.

If Bush wants to change personal retirement accounts, then focus on 401k plans and IRAs, don't touch SS.

[AzDar]

4. The freaking monkey has apparently given up on the "Social Security

is Bankrupt, Red Alert, Red Alert" theme, and has now switched to the old " Gimme your money, and I'll double it for you" scheme. Which is it, CuckooBananas??? God, you can almost SMELL the flopsweat!!!

[Whoa_Nelly]

6. Good call, AzDar!

But will the media make a point of the flip-flop?

Nawwww....read here re: the GOP and the control of the media since Watergate (Robert Parry article):

http://www.consortiumnews.com/2005/060205.html

The Real Lessons of Watergate

As the Washington Post again basks in the faded glory of its Watergate coverage, many of the scandal’s crucial lessons remain obscure even to people close to the iconic events of 33 years ago. Ironically, that’s especially true for those on the winning side.

Indeed, it could be said that today’s U.S. political imbalance – tilting so much in favor of Republicans over Democrats – derived from the simple fact that conservatives learned the real lessons of Watergate while the liberals didn’t.

Most importantly, the bitter experience of Watergate taught the conservatives the need to control the flow of information at the national level.

more...
http://www.consortiumnews.com/2005/060205.html

[DeepModem Mom]

7. That is an excellent piece -- thanks! nt

[patcox2]

8. Look on your paycheck, the deduction is labelled SSI. "I" = insurance

Look up the statute which created "Social Security." The official name of the program will be found there; it is "Social Security Insurance." Thats its name.

We live in a world so divorced from reality, so profoundly influenced by media repetition of right wing spin, that people actually believe there is a debate over whether "Social Security" is an "investment" or Insurance? There is no debate. The whole idea that its an investment is just right-wing spin, false and misleading right wing spin.

Its insurance. Thats its name. Read Roosevelt's speaches about it.

There is no debate. Its fucking insurance.

[patcox2]

9. Adjusted for 43 years of inflation, what is your "nest egg" worth?

This is such bullshit.

[daleo]

11. I happened to have just estimated this:

That 20 year old's 100K would be worth (in 43 years):

at 1% average CPI increase per year: 69K
at 2% average CPI increase per year: 53K
at 3% average CPI increase per year: 43K
at 4% average CPI increase per year: 36K
at 5% average CPI increase per year: 31K

So, if inflation is quite low, it will lose about half it's value over that time span.

[patcox2]

10. Here's a link to the federal statute on Social Security INSURANCE

This is the law which creates and governs the Social Security program. You will see that your benefits are officially designated "Insurance benefits." It is an insurance program, always has been, from the beginning, its in its fucking name.

http://straylight.law.cornell.edu/uscode/html/uscode42/usc_sup_01_42_10_7_20_II.html


The fact that anyone would think this is a debateble issue at all is a testament to the pervasiveness and power of right wing propaganda, the right wing calls it an investment only to argue that its a poor investment.

Fire insurance is a poor investment, too, if you want to consider it an investment.

Anyone who wants to do away with the current system and opt for this "investment" thing Bush is putting forward, fine, but this should be the deal: your parents lose their benefits. If they are dead, you pay back the benefits they got.

[DeepModem Mom]

13. There it is, pat -- thanks!