Okay.. you "invest" one half your share of social security withholding

[SoCalDem]

Right now, you are tagged for 1/2 and the boss for a matching 1/2..

Does anyone really think that bosses will continue to "match" the full amount, when you may be investing 1/2 of HIS matching funds on something totally stupid that will lose money?

My bet is this..

for simplicity's sake we'll use 8 percent as the amount (I know it's not that amount)

Right now the employee gets credit for

4 from employee
4 from employer

=8

with the *² plan you could end up with

2 "invested"
2 to SS from employee
2 to SS from employer
=6

so right from the get go, before any "account manager" starts grabbing "administration fees" from your "private account", you have lost 1/4 of your former "set aside" money....plus what the fund managers will take as commissions, handling fees, slush-fund management.. whatever they will call the thing.

Bosses will scream and holler about how unfair it is for THEM to have to subsidize their employees' "gambling" , so mark my words, they will be only required to match what the employee puts into SS..

Will the bosses raise the employees' salaries so they get that "extra" 2% ??? Dream ON!!

[Eric J in MN]

1. The plan is to give people a choice of 5 conservative investments,

like conservative mutual funds.

So the idea of people getting control over their money is false, but so is the crticism that the investments themselves would be very risky.

[SoCalDem]

4. Risky since they are PRIVATE investments that will have fees and costs

deducted from them.. and since people (most people) don;t understand this stuff, you know they will be making bad decisions along the way..:(

[Fescue4u]

7. private is not equal to risky

In fact quite a few public investments are pretty damn risky.

I agree that people will be making bad decisions, although its gonna be tough to make worse decisions than Bush does with it.

[BlueEyedSon]

14. But private = pricey

If the new "solution" has the same non-risky rate of return, what does it actually solve?

[Fescue4u]

15. Really?

Not im my experience.

Well I take that back, there are some private investments with higher fees. So I just avoid those.

In the end, it all comes down to the rate of return.

[leftyandproud]

25. not true

You can put any amount you want in a vanguard fund, investing on a regular basis, $25 or $50 every two weeks. Total fees = $0.00 They only charge .19% a year of the value of your fund...not much at all.

Some companies charge even LESS. The Ishares S&P500 index only charges .09% in fees.

[BlueEyedSon]

26. Neither of you explained how private is BETTER (i.e. in terms of

rate of return).

Perhaps the fees can be low (as low as the SS fund fees are today), but that is not the way privatization played out in UK.

Privatization is not a "fix". Period.

[isit2008yet]

19. The funds you will invest in

will be dictated by the likes of Tom Delay. Do you really want a bunch of corrupt politicians telling you how to invest? Your currently have the right to invest in personal accounts using various investment firms.
Everyone on the hill will have a "great" company (like Enron) that some of the funds should be invested in.

You gotta be freaking nuts to believe there will be a retirement of any kind with this kind of political wrangling going on.

[Fescue4u]

2. Employers don't have a choice

They have to match.

I know of a few individuals that were held liable for the their companys failure to pay the match. Wasnt their fault but because they were "officers" the IRS can choose who to target.

Big trouble and you cant discharge it in bk either.

[SoCalDem]

3. But they only have to match the employee's contribution

That's the loophole for them to escape through..

Why should I as an employer have to match what my employee chooses to "risk" his money on:)

[Fescue4u]

5. Uh yeah..

But that contribution is fixed at 7.65% till you max out at around $90k of income.

Its not like a 401k where you can choose how much you spend on SS.

[SoCalDem]

10. I know that..

:)

That's not what I'm talking about :)

[Fescue4u]

11. oh well then.

ok i guess.

[charlyvi]

17. Actually, it's not 7.65%

Medicare is 1.45%--that goes in the Medicare trust fund (no limit on Medicare contribution). The old FICA, or old age, survivors and disability portion of the tax is 6.2%--that's what we would be investing, and that's the portion subject to a 90k max.

[Fescue4u]

18. your right of course

I just didnt want to get to technical.

[SoCalDem]

20. That's why I used a fictional number to start with

:)

[Bozita]

6. Nothing has been said about the employer's contribution

But the strong backing by the Chamber of Commerce suggests that there might just be something in it for them.

I think you're on the right track.

[SoCalDem]

8. You betcha.. they will be exempt except for the portion that remains in SS

so they will be encouraging their employees to "go private".. That's extra money in their pockets:)

[Fescue4u]

13. That would be a good loophole for the self employed

right now they have to pay twice that of someone who works for an employer.

Self employed folks will just self contribute and save the 7.65 match (possibly investing the saved amount into a true government hands off account)

[SoCalDem]

16. That could be the exact reason why the Chambers are endorsing the idea

After 4+ years of this crew, I have a second-sense whnever they propose something.. It usually hurts the same people they say it will benefit..

Self employed people and small businesses may just love this new idea:)

[Eric J in MN]

9. We're speculating about a law which hasn't been written, but

I doubt the law would let employers cut their contribution by 2/3.

[SoCalDem]

12. With this crew in charge?????

:)

[soothsayer]

21. What happens to all the people who lose all their money?

We just let them die?

[BoogDoc7]

28. Have you...

Ever known anyone to lose all their money investing in mutual funds?

[isit2008yet]

22. I think your right...

Some of the investing talking heads seem to think that once the baby boomers go through the system that the current 12% , from employers and employees, (6% from each) will sustain the system for decades. Some say that Bush isn't looking far enough ahead and that taking money from the system only helps it's demise. So I imagine your right that employers will reduce their contribution as well because Bush is pushing for the end of SS.

[BoogDoc7]

23. Other questions...

What has been the rate of return on most of the large cap mutual funds over a 30+ year span? (the ones invested in solid companies)

--a note on this...the current line is on mutual funds, NOT single stocks. Mutual funds tend to be good, solid investments...so we're not looking at congress putting all of someone's money into a single stock.

Who all would be able to invest?

Who already invests and benefits?

If such a measure were into effect at the beginning of SS, what would have the return been to now?

[SoCalDem]

24. Retirement Roulette should not be the goal here

With "personal/private accounts" everything will depend on HOW the economy and mutual funds are doing when you retire.. Things might be just kicking along for 20 years...right up until the time YOU retire, and they could go right into the shitter at just the wrong time..

The "even-ness" of Social security is what has made it "safe" and "stable" for all these years,. It was NEVER meant to be ALL of someone's retirement(although the gutting of pension plans and unions have made it so for lots of folks)..

If the "tinker-proof age" is truly 55, how big of a "nest egg" could a person of 54 now (especially in THIS job market)be expected to amass in 13 years??

A nation HAS responsibilities to its citizens and SS is/was one of the last remaining "kept" promises..

It's acutely irritating that the most vile person ever to enter the White House should be able to harm so many people in such a short amount of time.. and harm THEM for all time:(

[BoogDoc7]

27. A little off...

Ask any financial planner - even if the market tanks, sound investment in solid performers STILL pays off at a better percentage than current social security, as my understanding goes. I could be wrong on this, but when the 90s boom finally ended, people (middle class, mostly) still weren't losing money if invested soundly, they just couldn't live off as much as they were planning (which it was rediculous to think that you could live off of 15% anyway - 7% was far more sound thinking). Yes, many retired...too early, I think.

This is about the rate of return for me. I'm 25. I want to be a good steward of my money...and I don't see Social security as a wise investment. I would look elsewhere if someone handling my money was making only 2% long term, when the market gives back 5% on a mediocre mutual fund.

[SoCalDem]

29. Yes, I understand .. it's about "you"

No one gets through life by themselves.. Your Mom wiped your ass when you were a baby, and now you do it by yourself, but someday, you might need help with that task again :)

Generations make "promises" to each other.. "That's what SS is.. a generational promise from young to old..

When I was young, MY FICA was raised a TON so that the people who were THEN retired could have a boost in THEIR standard of living, AND to PRE-PAY for MY generation's SS obligations... So you see, WE already paid for ours.. The fact that republicans STOLE our money (they're very good at that, you know) should not mean that WE must now forfeit what little we might expect to get when we retire..

When I was young, interest rates were 15% or more to buy a house.. Inflation was rampant, there were wage freezes, the prime rate was 20% or more...yet we were still expected to pay those higher FICA rates.. I do not recall a chorus of "IT'S MY MONEY, and I"M KEEPING IT ALL"..

People your parents' ages (and mine) have had extreme financial burdens placed on them during your "growing-up years", so you and your contemporaries could have a decent send-off into adulthood.. I guess some of you did not learn the "sharing" lesson..

There IS always the possibility though , that since the youngsters want us to vacate jobs so THEY can have them, and when those jobs go..so does insurance, ,many of us will not live long enough to collect that SS.. I guess you youngsters may get to keep YOUR money:)

[BoogDoc7]

30. Couple things...

I never made mention that I did any of this on my own; I just ask that I be allowed to depend on my own dime rather than someone else's. Social Security is just going to be a bonus check for me at that age - if it's there. I'm not planning for it.

And I don't see how there is anything that states that it wouldn't be there for you - I'm not for doing away with the whole thing and making it a purely investment deal. There's a "promise" there, and there needs to be some sort of reimbursement. It does need a modicum of guarantee to it - I'm just saying that the money can be better invested. The guys on Wall Street have typically - save for one great instance when the rules allowed too much to be done on credit - been good at making money. It's their job - why not let them do it for me for my retirement, rather than depend on my grandchildren to do it?

Also, how fair is it on my generation to pay disproportionally than my parents' did? Why should two of us pay for one person when three or more used to be able to able to provide?

[Bozita]

31. A lot of folks with "sound investments in solid performers " lost their...

... asses in the bust of 2001. They weren't all stupid or uninformed.

In 2000, Enron was widely considered as one of America's finest corporations. Lotsa fund managers bought and held lotsa Enron.

Picking the future winners and losers is a lot more difficult than it sounds.

[BoogDoc7]

32. Ok...

Who? Numbers? It made press, but how many people were out on the street because their long-term growth large cap mutual fund invested in Enron?