Privatizing Social Security -- What does this mean?

[Kablooie]

Can someone describe what the Republican idea is when they say they want to privatize social security?

Right now if a conservative tells me it's a good idea, I don't have enough info to refute his claim.

[realisticphish]

1. it means

"stop taking money out of my pay check"

I don't think they consider anything past that

[yurbud]

3. it means just the opposite--KEEP taking money out of my paycheck, but force me to give it to Wall St

the worst of both big business and big government. The amorality of big business coupled with the coercive power of government. What cold go wrong?

[cornermouse]

12. Pretty much the same thing they did with HCR.

[yurbud]

26. and the plan for education ''reform''

[Edweird]

2. It's just a way to funnel more money to the ruling class at the expense of workers.

It will turn your safety net into a gamble on the market.
George Carlin was a prophet.

[napi21]

4. They want you to b able to take at least part if not all of the $$

deducted from your paycheck for SS and invest it in Wall Street.

I can't believe anyone could possibly be for this plan after seeing the recent meltdown of WS! There would no longer be a guaranteed income for the elderly like we have now, but it would be reduced dramatically and your income would depend on how much you managed to amass in "your" SS investment.


All you have to do is think about how much money you made in your 401K in the past. I've had 41K's with 2 different company jobs over 22 years & I' sure hate to have to completely depend on their earnings for my monthly income now.

My husband & I are both retired within the last 2 years and we are managing to live just fine on our SS checks. If we had to depen on only our savings in our 401K's, we'd manage to survive for about 3.5 years at most.

This idea of privitazation is just another way the Pubs have tried to destroy SS that they've hated since it was enacted many years ago.

[dkf]

7. Did you put 16% in your 401k every year you were working?

And at your retirement you could have bought an annuity that paid a steady amount til the day you died with no fluctuations due to the stock market. I'm not sure which would have come out better but those are the most appropriate comparisons.

[napi21]

9. No, I put in 7% I believe. I was making a pretty decent salary in the last 10 year & still

don't have anywhere enough to buy the annuity you suggest. For this to work for everyoe who wasn't making the amunt I was is pure BS!

[dkf]

13. $2346 is the max social security.

That is about $400,000 in a immediate annuity at age 65. So take your 401k, double it, and if it is less than $400k then you would be better off with social security. If it is more than you are worse off. Also consider that any year you didn't put your 7% you need to adjust your 401k numbers upward. I just got the immediate annuity numbers off a generic website so I'm not sure if it adjusted something for expected inflation.

This is also assuming you are getting max social security. If you aren't and multiplying your 401k by two outpaces 400k then it is even a worse deal.

[B Calm]

18. What happens to your annuity if the insurance company becomes insolvent?

[sendero]

19. Bingo..

.... anyone remember AIG?

[dkf]

21. The insurance company has reserves that are overseen in each state.

Also when one company goes down another company usually takes over the policies. Remember when AIG looked like it was failing they said the US policy holders should be okay but the overseas policies weren't protected because their countries policies didn't necessarily require reserves.

However it is true that you should diversify your annuities also. That would add another layer of protection.

If all the insurance companies failed that would probably be an indication that the overall economy collapsed. If that happens then your Government isn't going to be in any shape either. We might as well take our guns and canned food and head for the hills.

[tulsakatz]

5. Bush wanted to do that too.........

remember when the stock market took a dive at the end of the Bush admin? And remember everyone's 401k also began losing value? I sat and watched mine go down every day and there wasn't much I could do about it. Then imagine the same thing happening to social security....

[dkf]

8. Postponing retirement from 62 to 73 might match the collapse in value of the market.

Especially when life expectancy is only around 78.

[dkf]

6. Right now it is a pass through system where workers pay retirees so what comes in goes out with no

Assets held much less an equity, fixed income, or cash investment. Back before this recession workers used to pay more into the system than retirees were paid and that represented a surplus. So the government took this surplus, told us they put it in a special government bond, and spent the money on the regular budget.

This leaves a social security system that holds a surplus amount but of which they already spent every penny.

Privitizing social security means when you pay your social security taxes some amount goes into an investment such as stock, bonds, or money market that belongs to you. So this belongs to you and if you die it goes to your family. On the downside your eventual payment would be a function of how well the investments you pick do. So if you make bad decisions or if the investments don't perform well you could have an amount that is unlivable.

Another issue is that during the transition the retirees would have to be paid out of the general budget because the workers money would go to the workers account, not to retirees.

[napi21]

10. Your description of what woud happen to invested $$ is right, BUT

your explaination of the current system is a bit off. Years ago congress voted to merge the SS $$ into the generl funds, but SS $$ are invested into treasury bonds and the payment of those bods come due at some point! When Shrub was put into the presidency, he had congress "give back" the surpluss funds that were designed to cover the retiring babyboomers, because he said "The gov;t should never have a surpluss. It's YOUR money so we're giving it back to YOU!." That was nottrue! Income taxes don't quite pay for thedfense ex[enses & theother things congress decides to spend money on so they BORROWED from the SS fund to pay for them. The tax cuts for the wealthy were part of that borrowed money. So the rich got money to play with & become richer, but now the loan is coming due & they don't want to pay it back! IMO, I say TS! It's time to pay the piper.

[dkf]

14. They don't really pay interest. Instead they issue more special issue bonds that are non negotiable.

"In return for this loan, the trust fund gets IOUs in the form of special-issue, interest-paying Treasury bonds. The interest isn't paid in cash, however; the Treasury issues the fund additional bonds for the interest amount. "

http://articles.moneycentral.msn.com/RetirementandWills/CreateaPlan/5mythsAboutSocialSecurity.aspx

They also aren't like normal bonds

http://www.dispatch.com/live/content/local_news/stories/2010/03/14/social-check.html

PARKERSBURG, W.Va. (AP) -- The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.

Gore lost the election and never got his lockbox. But to illustrate the government's commitment to repaying Social Security, the Treasury Department has been issuing special bonds that earn interest for the retirement program. The bonds are unique because they are actually printed on paper, while other government bonds exist only in electronic form.


They are stored in a three-ring binder, locked in the bottom drawer of a white metal filing cabinet in the Parkersburg offices of Bureau of Public Debt. The agency, which is part of the Treasury Department, opened offices in Parkersburg in the 1950s as part of a plan to locate important government functions away from Washington, D.C., in case of an attack during the Cold War.


One bond is worth a little more than $15.1 billion and another is valued at just under $10.7 billion. In all, the agency has about $2.5 trillion in bonds, all backed by the full faith and credit of the U.S. government. But don't bother trying to steal them; they're nonnegotiable, which means they are worthless on the open market.

[dkf]

15. Oh and I don't think I've ever heard they have maturity dates.

I think they will just get redeemed as the social security retirees need more than the workers are paying. But in the end the workers will pay for social security for the retirees and also general taxes to fund the bonds that will pay for the amount of the underfunding. So future workers will have to pay the entire amount anyway.

They pretended like everyone was getting taxed early on but while they raised social security taxes they decreased income taxes by a greater amount. What a joke.

[fasttense]

16. Ronnie Raygun changed it in 1983 to a surplus account.

Raygun planned for it to have a surplus. He doubled the Baby Boomers' payments into Social Security. So the Baby Boomers were the first generation to pay for their parent's and their own retirements. The current surplus in Social Security is near $3 Trillion. That is the Baby Boomer's retirement money they paid into the system.

It has NOT been spent. It is in Treasury notes. The federal government will have to default on those notes to make the money go away. It should default on ALL notes purchased by ALL Americans if it defaults on the Social Security notes.

What the government does is offsets its deficit with the Social Security surplus. The deficit looks smaller because the surplus is subtracted from it.

But the money is till there in notes and Wall Street wants it.

[dkf]

22. They are in special issue non negotiable notes with no maturity as far as I can tell.

They pay their "interest" in the form of new notes. Funny that. They are the only treasuries printed on paper but if you stole one and tried to sell it you wouldn't get a dime because as I said they are non negotiable and worthless on the open market.

[Skittles]

11. they want Wall Street to get their greedy paws on S.S.

[B Calm]

17. It's a scam to milk the working class hard earned money to international corporations.

[mmonk]

20. Doing away with social security and forcing people to be private investors

with the money.

[rustydog]

23. They do not need it...most of them have inherited their wealth

or were bought and paid whores of industry and are insulted that they and their ilk should pay into a system they will never use. It offends them to the vile core of their "I got mine" existence.
these Fundamentalist Christians fail to live by the teachings of their Holy Bible:
As you treat the lease among you, yoou treat me. and being your brother's keeper.

They have theirs, they are entitled by their blood and station in life. Fuck Social Security, Fuck unemployment benefits, Fuck Food stamps, drug-test them all!

The rich are the entitled the rich are the spoiled, not the people on welfare, food stamps, unemployment.

Tell them to leave Social Secuirty alone period. don't argue about it, leafe it fucking alone!

[laughingliberal]

24. +1000 nt

[ProgressiveEconomist]

25. When you die on SS, where does your monthly benefit go? Now, it goes to a new

retiree. That is "social insurance"; a system where money goes to retirees and the disabled, and only to retirees and the disabled.

But if the "privatizers" have their way, if you should be lucky enough actually to get a monthly Social Security retirement benefit, the principal providing it will go to your heirs But obviously the end of the "social insurance" aspect of Social Security means that current FICA taxes won't provide NEARLY enough money to pay everyone the same kinds of lifetime benefits that are guaranteed now. Most of the money would NOT go to retirees and would NOT go to the disabled.

Thus the Rs want to BREAK the sacred intergenerational contract that has been in place since the 30s: each generation works and pays current FICA to fund current retirement benefits for the previous generation.

If the Rs get their way, there will be a last generation that will have paid for the previous generation's retirement, but will get almost nothing in return from the next generation. Social Security will have been transformed from a social insurance system where everyone's a winner to a drastically underfunded 401K system where 99 percent are losers.

[hansberrym]

27. We are already there.

If the Rs get their way, there will be a last generation that will have paid for the previous generation's retirement, but will get almost nothing in return from the next generation. Social Security will have been transformed from a social insurance system where everyone's a winner to a drastically underfunded 401K system where 99 percent are losers


The generation reaching retirement age in the late 2030's will get about 75 cents on the dollar of their benefit. If the economy does not recover for a few years, the date that benifits will be reduced will come sooner.


Everyone is not a winner under the current plan. It is an insurance plus annuity plan and if you die before or just after reaching retirement age, you and your heirs receive next to nothing. That might be OK if we are talking about 1 or 2% of a worker's salary, as SS was at the start of the program, but with SS now taking more than 6% of a working person's income (>12% if self employed), the annuity system ought to be reformed.


The sacred intergenerational contract has been breached every generation, as each generation demanded and rec'd more benefits than justified by their contribution, so that each future generation is in danger of getting a much lower return. What will we tell those who are scheduled to retire in 2037?

[ProgressiveEconomist]

28. 'The generation reaching retirement IN THE LATE 2030s'? Tha'ts not "almost there"

IMO.

Let's see first what happens in 2017 or so, when the cash flow from Social Security is slated to turn negative for the foreseeable future.

Thirty-year projections aren't reliable, and even seven-year projections can change radically if sensible policy changes are made (such as taxing ALL income for Social Security, the way ALL income is taxed for Medicare).

[sfpcjock]

29. It means they want to give it to Goldman Sachs

and the big banks to buy unregulated derivatives with.

Sharron "Engels" in the Nevada senate race with Harry Reid wants to do it, but now she won't talk about it any more with the real press and avoids all reporters except Fox. She says she wants to close the "lock box" that all Congresses forever have used to help balance the general fund. That will never happen and her real goal is to do the above--kick it back to the 6 big banks that own 60% of the U.S. economy now.

[Cleita]

30. They want us to take that money that is taken

out of our wages for FICA and invest it in Wall Street. If you invest it wisely, it could work for you, but if you don't you will have no retirement and there will be no Social Security paid to you. It has failed everywhere it has been tried. Those governments have had to come up with a better plan because they have been surrounded by destitute seniors who paid into retirement all their working lives and then had nothing to live on because they lost it in the stock market and other investments in the private sector. We actually have IRAs and 401ks for this. We don't need to funnel our money to Wall Street from Social Security as well.

Google what happened in England and in Chile for your friend to chew on.