The Social Security Private Account Myth

[ThomWV]

The dud brought up private accounts, invested in the stock market, for Social Security again tonight.

I want you all to understand clearly why this is not at all possible.

Social Security benefits are paid to the system's receipents using funds collected from today's workers. That is how the systme works. If a portion of the worker's contribution goes into the stock market those funds will not be available to pay the current retirees. It is that simple. And as bad as that problem is right now, with about a dozen workers paying into the systme for every retiree (and others) who is drawing down on the system, when the baby boomers retire and begin to draw, SOON, the diversion of any of the flow of funds into stocks will cause the collapse of the system.

Do not forget this. You will hear all sorts of foolish arguments for the privatization of social security and not one of them is viable.

Thom

[The Backlash Cometh]

1. Of course they want to collapse social security. But do you think the

Republican voter is smart enough to pick up on this? The young have also been told that they will never see that money because SSN will dry up during the Baby Boomer retirement years. So the young will vote for their own self-interest and figure that it's better to gamble something now, than to be left without anything at all.

Pitting one generation against the other, in order to achieve their dream of anarchy.

[cthrumatrix]

2. read O'Neills book...the plan was to fund 37yr+ with accounts

costing $1trillion and the other invest on thier own...you have to get the book.

from tonight we have no idea what the plan really is...but the dems will fight it...becuase this basically does away with soc sec.

[mopinko]

3. aw, come on, stock brokers need to retire, too.

i guess he never learned how to make friends on his own, he has to buy them. there is not a rethug in this country that he is not gonna bribe eventually.

[cthrumatrix]

4. this whole subject really needs a huge maginfying glass ..NOT 5 min

on the SOTU....

Like the medicare bill signed at night and under coersion.

[DevilsAdvocate2]

5. Maybe, maybe not

Allowing a portion of funds to be invested may work. However, the investment should be limited to gov't securities. Long-term bonds provide guaranteed income and a guarantee that you will not lose your investment. Well, unless the U.S. gov't goes under, in which case everyone is screwed anyway. But even investing at a 4% or 5% return would greatly increase the amount of money available for future retirees.

Regardless of which path is taken, I think it is essential that some serious questions be asked concerning social security. When the plan was instituted, the average life expectancy was 62 years, but you couldn't get full retirement benefits until you turned 65. However, average life expectancy has increased 8-10 years but you can still draw full retirement at 65. That is the primary reason the social security system is drowning in red ink. Unfortunately, no politician wants to approach the subject honestly because old people like to sit around and bitch about the gov't and how things used to be in the good old days. And they will vote someone out of office in a heartbeat.

[gristy]

7. Yes, you are right

SS retirement age must be increased. It is a fact of life, just as life expectancy has increased.

[spanone]

6. Anytime you invest in stocks, bonds or whatever you are

warned that there are no guarantees. You may make money and you may lose money. It is ill advised even at small percentages.

[DevilsAdvocate2]

9. Bonds are guaranteed

U.S. Treasuries are, anyway. That's why the return is so low, relatively speaking. The only way you lose your money is if the gov't can't pay its debts. And like i said, if that happens, it doesn't matter where your money is invested.

[DevilsAdvocate2]

10. And besides....

Social security was never meant to be one's sole source of retirement income. It was meant to be a supplemental program, to enhance one's pension/401k/personal savings.

[sweetheart]

8. it was veiled priviatization

Ya think those new accounts will be government accounts?... nope... he's doing a giveaway of the billions to his brown nosing, people-fucking, brownshirts.

[Hippo_Tron]

11. I'm pro privatization BUT...

I would NEVER trust the neocons with my money, even if it sounds like a good idea.