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Social Security Online History Pages
slash slash www dot scribd dot com slash doc slash 13672493 slash -Property-Rights-The-Hidden-Issue-of-Social-Security-Reform-Cato-Social-Security-Choice-Paper-No-19-
"One of the most enduring myths of Social Security is that a worker has a legal right to his Social Security benefits. Many workers assume that, if they pay Social Security taxes into the system, they have some sort of legal guarantee to the system's benefits. The truth is exactly the opposite. It has long been law that there is no legal right to Social Security. In two important cases, Helvering v. Davis and Flemming v. Nestor, the U.S. Supreme Court ruled that Social Security taxes are simply taxes and convey no property or contractual rights to Social Security benefits."
...
You were lied to.
There is no "trust fund."
There is no "insurance."
It was a "tax them and bribe me" program from day one.
It tricked Americans into embracing socialist slavery (compulsory charity).
...
It's also 100% voluntary.
“The Social Security Act does not require an individual to have a Social Security Number (SSN) to live and work within the United States, nor does it require an SSN simply for the purpose of having one...”
- - - The Social Security Administration
There are many possible ways to fix social security as discussed in this article here. The fact of the matter, to keep our current system we would most likely have to do a combination of their 12 ideas.
The vast majority of people want to keep some form of social security, however it is a touchy subject as people rely on social security in their elderly ages or other vulnerable times.
It is so highly politicized that we have refused to fix it. As fixing it will open yourself up to political attacks as you either raise taxes, reduce benefits, or a little of both. Bill Clinton mentioned privatizing social security and quickly dropped it, as did Bush. Paul Ryan was portrayed as shoving Granny off a cliff for a proposal that wouldn't effect anyone currently 55 or older.
We need to move past these petty attacks in order to find a solution. The longer we wait to fix social security, the more painful it will be.
What about this idea here - a government sponsored annuity program:
-Your payroll taxes go into an individual fund attached to your name. Your contributions are specifically recorded and will help determine your benefit.
-You can choose to put in more money into the system - for more benefits later on.
-You would have "some choice" as to how the money is invested.
-At least 50% (but up to 100%) of your money must be invested in a Government Backed Fund that buys US Treasuries, FDIC ensured CDs, State bonds, etc... This would be a conservative and reliable investment, although it wouldn't be expected to have a massive return.
-Other Investment Options would make up anywhere from 0 to 50% of your money based on your own desire. These could include things like an S&P 500 index fund, Physical US Gold and Silver Eagle coins (like they do in the IRAs now), US Company Bond Fund, and a Total US Stock Index Fund. This is open for debate, but prefer to keep it in US investments.
-Workers could see their funds grow over time and may learn about saving and investing -- this may lead to better choices through the education that the program would inherently provide. At least a few people would be more likely to open an IRA, brokerage account or other savings after learning more about it from this system.
-Workers could retire at any time. There is no magical age requirement. However, retiring very young would mean that you have less of a benefit.
-The government has an open and transparent formula where you enter in your age as X years AND your fund's dollar amount of Y and then if you choose to retire you essentially purchase an annuity and get a guaranteed benefit of Z dollars for the rest of your life. You can monitor this and better plan for retirement on your terms.
-Once you choose to retire your investment options no longer matter and your individual fund's dollar amount isn't subject to your investments anymore -- the government takes your money and buys you a government backed annuity. You get a set monthly benefit for life.
-If a worker dies before receiving a certain amount of benefits based on the worker's individual fund, then that worker's heirs will receive a lump sum. This will allow the lower and middle classes to have more opportunity to pass wealth to other generations.
What do you guys think?
??? WhyTF would someone who expects to die early EVER want an ANNUITY that expires when they do?
How would this plan leave seniors in poverty? You transition the program over for the younger generation and protect the current seniors with everything as is - like Chile did.
A person making $20K a year, NO extra contributions, 3% raises from age 18 to 63 and only a conservative 5% return - would still have $675,000 to buy an annuity with. According to CNN that could get an annuity worth $3,764 a month for life...hardly poverty money...
Remember, most money would be invested in safer funds (SS technically is also invested in US Treasuries - no?).
Paul Ryan was demonized for Social Security ideas too though - although you are correct the granny commercial was about medicare.
??? Isn't Chile the country where low-wage workers get a rate of return on retirement savings about 2 points lower than higher-paid workers?
The Chile model is the most successful retirement system I have seen.
In 1960 Chile adopted the same Social Security program the US had. By 1990 they realized that it was not sustainable (something we have yet to acknowledge). So they made the government program optional. Everyone still had to contribute the same amount to their Social Security Account, but everyone had a choice of either leaving it in government's hands, or investing it in the private market.
By 1996 only 10% remained on the government Social Security program, and the other 90% were investing in the private sector. Almost instantly Chile's economy began to boom, and to this day they one of the biggest energy producers and distributors in South America.
It only took Chile 30 years to realize Social Security was a serious mistake. We have had Social Security for 80 years and still refuse to admit that it cannot work.
What do you say to Chile's low-wage workers, who get a rate of return inferior to what higher-paid workers get?
This article appeared in Investor’s Business Daily on December 17, 1997.
America’s Social Security system will go bust. As political leaders scramble to save it, they’ve overlooked an obvious free-market solution that works. They need only look at Chile.
Pay-as-you-go social security systems destroy the link between contributions and benefits, between effort and reward. Everyone tries to minimize what he puts into the system while trying to maximize through political pressure what he can get out of it. That’s why pay-as-you-go plans are going bankrupt all over the world.
Chile faced that problem in the late ’70s. As secretary of labor and social security, I could have postponed the crisis by playing at the edges, increasing payroll taxes a little and slashing benefits a little. But instead of making some cosmetic adjustments, I decided to undertake a structural reform that would solve the problem once and for all.
We decided to save the idea of a retirement plan by basing it on a completely different concept — one that links benefits and contributions.
Chile allowed every worker to choose whether to stay in the state-run, pay-as-you-go social security system or to put the whole payroll tax into an individual retirement account. For the first time in history we have allowed the common worker to benefit from one of the most powerful forces on earth: compound interest.
Some 93% of Chilean workers chose the new system. They trust the private sector and prefer market risk to political risk. If you invest money in the market, it could go up or down. Over a 40-year period, though, a diversified portfolio will have very low risk and provide a positive rate of real return. But when the government runs the pension system, it can slash benefits at any time.
The Chilean system is run completely by private companies. We now have 15 mutual funds competing for workers’ savings.
We guaranteed benefits for the elderly — we told those people who had already retired that they had nothing to fear from this reform. We also told people entering the labor force for the first time that they had to go to the new system.
Today, all workers in Chile are capitalists, because their money is invested in the stock market. And they also understand that if government tomorrow were to create the conditions for inflation, they would be damaged because some of the money is also invested in bonds — around 60%. So the whole working population of Chile has a vested interest in sound economic policies and a pro-market, pro-private-enterprise environment.
There have been enormous external benefits: the savings rate of Chile was 10% of gross national product traditionally. It has gone up to 27% of GNP. The payroll tax in Chile is zero. Of course we have an estate tax and an income tax, but not a payroll tax. With full employment and a 27% savings rate, the rate of growth of the Chilean economy has doubled.
That does not mean that we do not have any problems in Chile, but I believe that a society based on individual freedoms — economic, social and political — is a much more prosperous and lively society.
Could something like this be done in the U.S.? People have said it’s utopian and that nobody in the establishment would support privatization, but I believe the situation is changing.
Of course, that does not mean that the reform will be done in the next month or the next year. I believe there’s still a lot of education yet to go. But there’s also a great opportunity here, and I think it’s a very responsible thing to give your children and grandchildren.
I would like to control my own account, after all its my money. I want to control how much I want taken out and when I want to retire and have the option to pass my retirement to my love ones in my terms and not have a bunch of red tape by the government.
My dad died at age 52 a month before I turned 18 years old, the government only gave me a check for $2,500 from his investment and kept the rest and my dad has been working full time since he was 18 years old paying into the government's social security system......he and his family never got what he invested in the system or what the government took by force.
What do you say to Chile's low-wage workers, who get a rate of return inferior to what higher-paid workers get?
What do you mean? The rate which workers earn from their investments does not change if you are low-wage worker or a high-wage worker. What changes is the amount of your contribution. Low-wage workers will be required to invest less than high-wage workers, but the rate of return remains the same for both.
What do you mean? The rate which workers earn from their investments does not change if you are low-wage worker or a high-wage worker. What changes is the amount of your contribution. Low-wage workers will be required to invest less than high-wage workers, but the rate of return remains the same for both.
Um...you forgot about the fees charged by the Chilean equivalent of Wall Street. That's why low-wage workers get an inferior return on investment, and one reason why liberals in this country freak out at the idea of privatizing Social Security. I support privatizing retirement saving, but this is an issue worth considering.
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