Nice open mind Supe.

Supes -

Nah, I don't take stuff personally. Met you once about 1 year ago.
You seem like a good guy....

Just pollyticks..

Craig

Do yourselves a favor and max out your 401ks to CYA.
SS is a bit like Unions.....outlived their usefulness. I've belonged to several -

Whoops!!

Assume that people are allowed to invest what would be their Social Security contribution and the market goes South. Does that mean those folks are S.O.L., or will this require yet another program to replace the minimum subsistence that S.S. provides? The "reform" will require additional personnel to monitor to assure conformance to the rules. So, even bigger government from those who eschew smaller, less intrusive government. The primary purpose of Social Security is not to provide a lucrative retirement, but to insure some degree of fiscal safety, something that invidivual investments cannot guarantee.

The only folks who will definitely make out with reform are stock brokers (hey, bring it on!!). For the rest of you, it is a crap shoot.

If Congress could keep its meathooks out of the fund, things might just be a bit less serious than they are. However, greed is what runs the federal government. The Social Security "lock box" is chock full of IOUs from Congress.

There are already 401k, 403b, 457, Ira, Roth Ira and other instruments out there. So, why is the President so intent on tinkering with something he obviously does not understand? Could it be to deflect the public's interest in other topics? Why not a looksee into the costs of medical service?

As a financier, I am appalled at the ignorance in Washington re: this situation, and the reluctance of our elected officials to "fess up" to precisely what the problem is, take responsibility, stop raiding, and move on to more pressing items of business. I am extremely concerned with predatory lending practices that are driving people closer to bankruptcy. Does the subject of interest only mortgages sound a little like the last option of people with too much plastic and not enough paper? Despite opinions to the contrary, the economy is NOT as healthy as it should and could be, currently driven by debt.

Smoke and mirrors, gentlemen, simply smoke and mirrors.

And no one to step up to the plate and take charge intelligently.

I made money on my 401k and other investments straight thru the recession and all. I did this by simply spending a few hours each week checking fund performance and adjusting accordingly. This past year has been a boon for me. I'm 34, I don't expect to recieve any SS benefit and as a capitalist I'd much prefer to invest my SS contribution as I see fit. This is simply how I feel, I hate paying taxes and nothing anyone says will change how I feel. Basically any chance I get to have greater control over my money and future I will take it. Generations ago we had a population that understood the value of saving. Today we have a population intently focused on buying things they cannot afford, I was guilty of this in the past and it hurt me financially. Now that I have "seen the light" I realize I don't need a bigger house of a new car every year, what I need is the piece of mind of knowing that I will be financially secure do to my investments. If I could invest my SS contributions myself I'd be better of today AND tommorrow. I'd bet there are a lot of younger Americans who feel just like I do and that is why SS reform will be pushed.

Christian, I have the same philosophy as you.
Learned the hard way and now I 'do the prudent thing' -

Not everyone is astute as the two of you. That is the plain truth. Sure, I did the same thing; invested every damn penny I could lay my hands on. But, most folks I know are like ostriches and have their heads in the fiscal sand. So, consider that you may be doing the right thing, but most will not. So, when their productive years are over with, how will they survive? Don't say it isn't your problem, because it will be. And the problem is compounded by the changes in retirement accounts offered by businesses such as the change from defined benefit to defined contribution and even worse, very. Again, luck of the draw. Enron comes to mind. How will those people survive? And look at the disclaimer on all investments outside those covered by federal law. The institute goes bust, you can lost it all

I recommend prudence in spending and credit use, and maxing out every legal investment opportunity that can be written off or defers taxes. Consider the SS account...the IOUs from Congress cannot be invested and that is one of the primary reasons the return is as low as it is. Government can invest quite well. Look at the New York State retirement fund. Weathered the past few years quite well.

it' about...
 

Supe brings up the safety net issue and I think is correct that the gubment will step in. I think one thing that is missing in this net is something we have lost over the years, family. What happened to the extended family? I will return to my family farm and be a doddering old fool someday and I won't need the gov to provide for me. I will get to work/play farmer and do something productive with and for my relatives until they plant me Most may not have a farm but what about other family members and places. Have we gotten so out of touch?

david

Backs up what Moneyguy said:
 

Relying on SS for retirement? How about your pension?
Take a look:

http://forums.pelicanparts.com/uploa...1105321558.jpg

Personal perspective
I have invested two groups of money in my lifetime. Money for retirement and money for college education of three kids.

My personal money history: day traded in late 70’s and made maybe 10%, lost a year’s pay in early 80’s following advice of stockbrokers, lost half a year’s pay in the early 90’s trying to do charting, lost 10K in a real estate Limited Partnership in the mid 90’s. Recently, I bought Lucent in the 30’s- yeah bad choice. Past retirement age and I have only my house paid for and 50k in an IRA. Now pause for a second, and think what losing a year’s pay early on would do to you.

Kid’s education money I put in US treasuries in the late 70’s, did well, sold in late in 80’s and bought a condo to rent, did okay, sold it as kids started to go to college in late 90s, and put the money in highly regarded mutual funds. Yeah, you guessed it, they now all have capital losses on their income taxes and we now have Stafford and PLUS loans to pay off.

Now my bother in law is even worse off, he has lost everything in the market and his big pension from his first job of 25 years got nicked by 34% when the company failed and their just wasn’t enough in the kitty and all his company stock was worthless. He did the American patriotic thing and bought stock in his company. It was Pan Am.

I do have one friend who did okay when he left the rocket company I worked for in 95, went into chip manufacturing, got his stock options, sold before the bust and is now retired. That was a wise decision as the rocket company closed its’ doors last year. I was fortunate in that I left in 95 to go work for a defense contractor higher up the food chain.

Another friend did not choose quite so luckily, was just laid off from his electronics job, and will probably exhaust all his stock option money getting a new job this year.

Bottom line for me, any of you in the 20-40 years range who think that the stock market is the answer may be fooling yourselves. From my experience, I would only trust real estate and US treasuries.

Parting thoughts;

I think the Social Security system has put the money in the best place it could have gone-investing in the US.

Privatization only supports the brokers and the very wealthy.

Think of brokers as falcons and you are the doves, and the very wealthy as the falconers.

Any time a broker calls you with a good idea for investing-sell.

Well, Enron is a good example of how it can go bad, but is it possible the SS system is basically the Enron of 2030? Emphasis should be placed on the fact nothing is guaranteed, even a SS check.

I do agree privatization has some pros. I think individuals should get an option: 1)let the gubmint manage my SS fund, or 2)let gubmint manage 50% of my SS check, and I take care of the rest. Regardless, somebody is going to get rich whether it be fatcat politicians or wall street gurus. The difference is empowerment of the individual. However, this is moot if you are relying on SS as your lone means of retirement. If you ain't preparing for retirement, you're in for a rough ride.

SS is just one of the major retirement issues. SS doesn't fix the pathetic low savings rate.

Thank goodness rental income is not subject to SS/Medicaid taxes. I'm glad to be out of that mess.

How do you gurus suggest changing the "live only for today" mindset of the average American?

I have been wrestling with this for years one client at a time. Maybe I change an individual's behavior here or there, but so few it makes little difference.

There is a dichotomy out there, folks...people want smaller less obtrusive government, but at the same time want government to "take care of them". Don't fool yourselves into thinking it is any other way.

And what will be the "cost" of federal oversight of a privatization system? A lot of us in the financial business look at it as a potential license to steal.

Work up a Lotus sheet on the potential earnings over twenty years of 4% of your annual salary and tell me what you get and at what assumed rate of return you are using.

Smoke and nirrors, like I said earlier, a way of deflecting attention away from other more pressing issues.

Well, from my perspective.
1) No fat cat is getting rich through Social Security.
2) No one relies on SS, it is intended as a subsistence.
3) Individual empowerment is what my brother in law and I did.
4) SS is not like Enron. SS is guaranteed-its as good as the US government. As good as US treasuries.
5) I see no pros to privatization

Steve..All good points. A primary problem that the Prez is not addressing is the need for some absolute minimum guarantee for that subsistence level. For every poster who thinks they can outfox the market and predict the future, good luck. Ain't gonna happen. I have seen too many who have thought this and lost their socks. The economy may continue to improve, but then again it may not. We have to remember that the economy is changing in the US of A, from producer of goods and services to importer of same, limiting the absolute growth.

I would love to see the "happy times" of the 90s return, but I am not betting on it in the near future. What I see is a continuing march toward a society with overwhelming debt and a very low rate of savings. Yeah..let's refinance that house, use the paper profits to buy more toys.

And, in the end, the grasshopper will be knocking on the ant's door pleading for help whan the snows of Winter arrive.

It is obvious that I am a very conservative investment counselor. My clients lose very little in the bad times because of that philosophy.