Privitization of Social Security

[jcommin]

I'm glad the Social Security System didn't go private. What a revolting development that would have been. The government may not be the most efficient but I'm glad nothing changed.

However, since we are now in the Finance business, maybe it's time.

[lukeh]

Why would it have been a revolting development? Do you think all that money was going to be placed in a few companies that went under? To me a revolting development is putting my money into a plan that even the SS administration says is going broke? Given the choice of investing my own money or giving it to the government to invest I'd chose me. That way I could dollar coast average into the market over 40 years and average 10% and retire at 60 with a million dollars instead of having to wait until age 70 to start collecting a few thousand a month.

[Superman]

Government's irresponsible actions are the reason why SS is financially "challenged." We all know that. Had that account not been repeatedly raided to augment other budgets, it would be fine.

But here we have an interesting development. We've got Congress just itching to spend our money to bail out financial markets, and the amount of money they're almost certainly going to release for this.......is probably enough to make SS solvent.

[Hugh R]

I did a spread sheet on this once calculatiing how much money I would have had dollar-cost averaging all my, and my employer's "contributions" would be worth over my 35+ years of employment. What I'd have at 3% interest is about $250,000 now and about 1/2 million in ten more years when I retire. What SS will give me over an estimated 15 years of retirement is about 1/3 of that amount.

[tabs]

Didn't you get the memo...SS is canceled...

[onewhippedpuppy]

God forbid I be able to keep MY MONEY, and invest it HOW I SEE FIT. Hell, I might actually PROFIT a little on my money. And when I intend to retire, that money would actually be there, as opposed to being stolen by the govt to pay their IOUs to a prior generation.

Yeah, that would really suck.

[Moses]

Market timing is for fools and experts. Most of us are neither. The recent poor market performance is not a credible argument against privatization of SS. My personal retirement portfolio will take a hit for a few years and then it will recover. It always does. There has never been a 10 year period where the stock market has lost value. Not even during the great depression.

The most reckless and irresponsible thing you could possibly do with your retirement money is to let the government "manage" it.

We are currently facing a crisis in liquidity and credit. The best thing we could do right now would be to allow optional private investment of SS monies. The extra money invested would buoy the markets and stabilize lending rates.

[Porsche-O-Phile]

Anyone who actually expects SS to be there for them is a fool. Anyone that actually expects it to be there and for them to be able to live off it is not just a fool, they're an idiot - and it irritates me because it's THOSE people that we'll be bailing out and paying for...

You think this $700B bailout is bad? Just wait until all the baby boomers start retiring and realizing that SS won't be enough and their retirement accounts are wiped out and that they need health care. This country is fked.

[Moses]

Originally Posted by Porsche-O-Phile

You think this $700B bailout is bad? Just wait until all the baby boomers start retiring and realizing that SS won't be enough and their retirement accounts are wiped out and that they need health care. This country is fked.

But there may be a light at the end of this long, dark tunnel. Most people expect a fairly radical trimming of entitlements. The Medicare prescription plan is toast, there will be "needs testing" for SS and Medicare. The size of government may be forced to shrink. A lot of people will get hurt as the entitlements dry up, but we may emerge with a smaller more efficient government. Not saying it will happen, but it's possible.

[kstar]

Originally Posted by Moses

Market timing is for fools and experts. Most of us are neither. The recent poor market performance is not a credible argument against privatization of SS. My personal retirement portfolio will take a hit for a few years and then it will recover. It always does. There has never been a 10 year period where the stock market has lost value. Not even during the great depression.

The most reckless and irresponsible thing you could possibly do with your retirement money is to let the government "manage" it.

We are currently facing a crisis in liquidity and credit. The best thing we could do right now would be to allow optional private investment of SS monies. The extra money invested would buoy the markets and stabilize lending rates.

+1 to this and what Hugh said.

The politicians using the current financial situation as an argument against the privatization of SS are hoping folks don't do the math.

FWIW.

[jcommin]

SS will be there for the boomers - nothing is going to happen to it for this large group of people. They won't stand for it. It is a large voting block and older people vote in larger percentages. Whatever changes to the system that will be made will fall on people under 50.

This Country has been on a drunkin' spending stuper since the 80's. The contry has spent and spent, got tax cuts, lowered Corporate taxes all in the name of growth. We never paided for it - it was paid all on credit. I get upset at the denial of our politicians as to how who is going to pay for it - Guess what? you are. You and me. This only got worse. Since 2000 after the market tanked - I personally lost 50% of my 401K portfolio. I never fully recovered because I would have needed to doubled my money in 7 years (2007). Using the rule of 72, I would need 10% growth per year. I don't need to tell you what happened in the 4th quarter of 2007 to our current situation. The market is down over 20% this year.

I am slowly realizing at 58 years of age that with the current market conditions and what I have left in my working career, my 401K isn't going to grow much more. I don't have the time. I believe this market will recover very slowly 5 -10 years. There is just too much debt.

The housing market drove this economy this decade; it was the best investment until 2006. Homes values are an important part of many people's retirement nest egg (25% -30%). I never counted on that because it wasn't tangible enuff for me.

As a boomer, retirement scares the crap out of me because the biggest wild card is health care. There is no way I can estimate the cost of what that looks like.

So:
I will work longer than I wanted to
I will have less money to work with
I will have less to pass on to my heirs


I really worry about my sons and every person under 50. Pensions are gone, you will be paying for your health care, SS will be allot less and your stuck with the biggest bill for this party we have all been on. You will have less discressionary spending and your lifestyle won't be as good as your parents. I'm not alone in this senario. I talk to many of my age and we see it very much the same. I paint a very grim picture and I'm very angry.

[Rick Lee]

There never was any plan to take all the money in the S.S. "trust fund" and privatize it. The plan was to allow younger workers to start putting a small portion - not all - a small portion - of their S.S. witholdings into the market.

So what do we have now? A S.S. surplus that is raided every single year down to about one penny above what is needed for the current year's S.S. payments. That "borrowed" money will never ever be repaid. It is thrown into the general fund to mask deficit spending by Congress. Once S.S. obligations begin to exceed the trust fund's income, there will be huge problems. Not a matter of if, but when.

[RKC]

SS Private? Surely you're joking.....

Here's what would happen:

The Republicans would take part of it private - so far so good - though it is so far underfunded that this would save us no money.

Then, at some point, the economy would falter as it always does, and, just as the Democrats did in the 1930's and the Republicans are doing now, the government would bail out those who invested foolishly.

Those of us who were responsible? Our taxes would go up (or our kids') and we'd get to pay TWICE for the same benefits that SS promises now.

LOL - all we need is someone with balls enough to raise the retirement age a bit, tie it to a better index for inflation, and the problem is solved. We've known this for 15 years, but neither party has done anything. They are as short-sighted as most of our consumers and most of the players on Wall St.

Like it or not, this is what America is - boom and bust - no history (which is sometimes good - no ancient antipathies like the Middle East - but a pretty much guaranteed helter-skelter future).

Make peace with your nation and it's temperament. We couldn't have creativity and advancement without the ability to thumb our nose at the status quo (Old Europe, much of Asia), and we couldn't live securely with our rights and property if there was no safety net at all (Zimbabwe or almost any country in Central Africa).

Make peace with it, save well, and act like Warren Buffet - this craziness is (or soon will be) a buying opportunity.

[Superman]

Originally Posted by Moses

The recent poor market performance is not a credible argument against privatization of SS.

While this is true, Americans' thinking patterns are not this complex. This current debacle has underscored the volatility and unreliability of the "markets." People expect more safety and reliability from government. This current problem will be a perceptual setback for "SS Privatization" for quite some time.

[jcommin]

I totally agree with Superman and RKC. I own 2 shares of Buffet's B stock. That performed very well last year; kinda holdin it's own this year. There's something to said for his mindset.

Bottom line - saving is in; you have got to save and take advantage of the 'time value of money'.

[RKC]

No, the market's performance is not a good argument against the privatization of Social Security. But the government's response is.....

Buffet is more rational than I, so I bought some BRK.B during the last downturn and it is doing nicely....

My stepmom bought a bunch of Continental Bank back in the day, betting on a bailout, and made a fortune. She later worked for the RTC....

Those big 1980's bailouts were also under Republican leadership.

It is sort of like "My Country, Right or Wrong." At some point, almost everyone will defend their turf if sufficiently threatened. Could be "Red Dawn" kids in a movie or politicians of either party in real life - if the calamity is big enough, they throw their "free market ideals" or "help the downtrodden" or whatever claptrap they are selling to get elected, and DO SOMETHING to help ensure that they GET re-elected. Hence Clinton curtails welfare and Bush II interferes with the free market.

I don't say this to pass judgement, but merely to gain knowledge of how to navigate the world, place financial bets, etc. After all, we are all only human - as Mark Twain said, "Man is the only animal that blushes. Or needs to."

[onewhippedpuppy]

Just remember, your SS money in a bank savings account making 0.8% interest is still making more than the 0% it makes with the government. Or in my case, probably -XX% because the government is just taking it.

Hell, I'd even make them a deal. I'm 28, and been paying into SS for 12 years now. They can keep that money. All of it. All I want in exchange, let me keep it from now on. I guarantee that I can do better sinking it into my ROTH IRA, and I know it will be there in 30 years. But wait, they need my regular payment, because it covers the SS people today. Yeah, this should end up well.

[RKC]

For those of you about to retire who have significant assets but are now in fear, there is a loophole:

There was a recent WSJ article a month or so ago about how you can retire at the minimum age, take the money for years, and then later, when you hit full retirement age, you may fill out a form and repay all you took out. Then, the next month you can re-file (at full retirement age) and get way more money per month.

If you're healthy, expect to live a long time, but want out of this crazy day-to-day right now, this might be a way to get some dreamy job for 5-8 years and retire now...

I'm only 42, so I suppose they'll close the loophole after the Boomers take advantage of it....