News, Privatize Social Security? Can we finally kill this terrible idea?

[mrbob]

Originally Posted by milliebfit

This does not make sence...I do not want the goverment taking MY money for MY retirement!!! What does this have to do with lunch with my girlfriends!!! The goverment takes our money and uses it on stupid goverment programs.

The Social Security program has always been structured to provide a minimal retirement standard of living so people do not have to starve to death as they did in the 30s... Each working generation pays for the generation before them. So letting people 'opt out' would ruin the system - since most young workers would chose to not pay for the older generation that has paid into the system their entire life for their parent's generation...

It will never be done away with - even though it is far from perfect.

You will come to value it when you approach retirement age - now I'm sure you're not thinking of that, and you resent the taxes... Well guess what - we've all gone thru that - I've paid into the system for 38 years so far and haven't seen one dime yet...

The system will absolutely remain solvent - the easiest way to assure this is to increase the income limit that is subject to the SS tax (FICA).

I do not subscribe to the privitization of this program - it would have been a disaster for retirees if they did that anytime during the past 9 years - because most mutual funds have lost money over that time period.

My advice is to just accept that there are certain things that government is going to provide (Social Security, Medicare, National Defense...) that we all have to contribute towards - like it or not... The alternative is to move to Canada.

[malamute]

The other thing -- how many years do people have to work in order to collect social security?

Whatever is the minimum time required to work in order to collect should be the required time for everyone. It's not at all fair that some people began paying in at age 15 or 16 and others didn't begin paying in until age 30. Maybe the opt-out time should be 20 or 30 years of paying in, and then you could be allowed to use your money as you see fit.

[Katarina Witt]

Originally Posted by malamute

My grandfather didn't retire until age 84, his income was plenty high and he was able to save for his retirement which lasted two years only.

My father-in-law was in his 20s when Social Security was enacted. He was a house painter. He paid in for about 40 years, then lived another 32 years to the age of 97! In his later years, he used to joke that he thought he got out everything he paid in! The point is, we don't know if we're going to retire at 65 or 84, and live to be 86, or 97, or die at 77 like my mother did.

[saganista]

Originally Posted by mcmastersteve

I'm all for eliminating the social security system. Under Social Security, the state forcibly takes a portion of people’s earnings and distributes them to the elderly. Despite the illusion that the government has created with IOUs issued to the Social Security Administration by the Treasury Department, and contrary to what people have convinced themselves over the years, there is no Social Security fund and there never has been. The idea of a Social Security fund has long been a deception by the state and a self-deception by the citizenry. It consists of nothing more than IOUs issued by the Treasury Department in exchange for the cash that the Social Security Administration has collected, IOUs that cannot be paid until the government first raises the money (by additional taxes) to redeem them.

Do you think it would be consistent with fiduciary responsibillity for SSA to simply put its surpluses in a coffee can? Do you think that it would be in the interests of taxpayers simply to forego the interest that might be earned on those balances by investing them? The SS Trust Fund will peak at a balance of about $5.5 trillion. How many markets can you think of that can efficiently absorb that level of investment? What percent, for instance, of the total capitalization of the NY Stock Exchange would you say that is?

Once you have confronted those realities, please explain how the worthless IOU's that the SSTF has invested in are any different from any other US Treasury security, such as those held by governments all over the world, or those held by mutual funds and individual investors seeking ultimate safety while still earning a competitive rate of return. How will -- or since some of them mature every month, how does -- the government service the securities that evidence the public debt? We know that it has never defaulted on a single penny of principal or interest due, so it has obviously been doing something right...how has it managed this?

Originally Posted by mcmastersteve

Social security is merely a government ponzi scheme. We have a national Ponzi scheme where Congress collects about $785 billion in Social Security taxes from about 163 million workers to send out $585 billion to 50 million Social Security recipients. Social Security's trustees tell us that the surplus goes into a $2.2 trillion trust fund to meet future obligations. The problem is whatever difference between Social Security taxes and benefits paid out is spent by Congress. What the Treasury Department does is give the Social Security Trust Fund non-marketable "special issue government securities" that are simply bookkeeping entries that are IOUs. According to Social Security trustee estimates, around 2016 the amount of Social Security benefits paid will exceed taxes collected. That means one of two things, or both, must happen: Congress will raise taxes and/or slash promised Social Security benefits.

Your numbers are a little out of date, but otherwsie good, but this is the same complaint you made in Part-1 and it does nothing to support a claim that SS is a Ponzi scheme, which was supposedly the thesis of Part-2. You have meanwhile misunderstood the SS trustees' information. The fact that benefit payments will exceed payroll tax collections (projected in 2017, btw) does not mean that benefits will exceed payroll tax collections plus interest earned on investments. Interest earnings assure that the Trust Fund balance will in fact continue to grow through about 2030. SSTF will be a net purchaser of securities through that time. After that time, the securities will need to be redeemed -- exactly as was planned in 1983 -- in order to make scheduled benefit payments. Redemptions can be accomplished through privatization of the debt, which would be the traditional means, or by monetization of the debt through sales to the central bank. The prospect oif this task would have seemed trivial had the substantial surpluses left by Clinton/Gore not been turned into gigantic deficits by the wastrel, George W. Bush, and some actual planning for it would now appear to be necessary. As we have some two decades still to work with, there is time to do that planning.

Originally Posted by mcmastersteve

Retirement should be a privilege earned and not deserved, if you want to retire, save your money, otherwise get a job and stop thinking the world owes you money.

So we should expect that, unless they somehow become able to support themselves for a couple of decades or so, the old and infirm will work long, arduous days until the moment they expire on the spot from the simple strain of trying to earn their meager living at whatever menial task they can manage to do at all? Do you have parents? Have you informed them of your plans for them? I doubt it, or your ears would still be ringing from a whoop upside the head.

You buy insurance in order to cover yourself should the going get rough. Disability insurance...umbrella liability insurance...long-term care insurance. Social Security is the same thing but run on a universal basis. Everyone has this important protection automatically, and everyone pays for it automatically. You'd better get used to this sort of thing...there is more of it coming down the pipe...

[jenn02674]

I am not so nearly as bright as most of the people that have responded here but it really astounds me that people have so much issue paying into SS, which is in effect an insurance program, simply because they *might* not get out what they paid in, but yet they do not have any issue whatsoever paying for their own health insurance or giving money to a stockbroker which has the exact same risk. Health insurance companies pull in a whole lot more than they pay out. If you take the money that you put toward your premiums and your copays and what your company contributes (don't forget that part which DOES result in lower pay for you), very few people get out what they pay in. Is it fair for me who is healthy and hardly has a cold that I don't get the same pay benefit out of it as my neighbor who has cancer?? It is the same concept.

Many people have stated that SS is basically a tax. I get that, we are forced to pay it if we work but how would you feel if your very liberal peace loving neighbor down the street decided he didn't want any of his taxes to go towards the military or for the roads since he rides his bike everywhere? I mean, where is the logic?

[saganista]

Originally Posted by malamute

I should be able to opt out. I come from a family that doesn't retire at retirement age and it's unfair that those of us who go on working don't get our money back while those who choose to retire young take it. My grandfather didn't retire until age 84, his income was plenty high and he was able to save for his retirement which lasted two years only.

Bulletin: You don't have to quit working to collect a social security pension. My Dad worked until three days before he died at age 85. My Mom worked until age 87 and quit then only because she was physically unable to do the job any longer. Both paid SS virtually all their working lives, and each collected SS since the day they were first eligible for it. Twenty years plus in each case, and my Mom collected my Dad's survivor check for the ten years she lived after he passed away. You're not just barking up the wrong tree, you're barking up a tree that doesn't exist.

Originally Posted by malamute

Others will obviously make far better uses with that money, they earned it, they should decide how to use it. Someone could afford to pay off a home mortgage much sooner if they had their money to do so, imagine most people paying up their mortgage in just 10 or 15 years and then being able to save the rest of their working lives for their retirements.

If they didn't pay SS taxes, they'd have to divert that money, not into paying off a house early, but into finding the equivalent life insurance, disablity insurance, and retirement insurance coverage somewhere in the private sector. Guess what the chances are of finding the same coverages at the same cost. Any alternative use of the funds would represent an assumption of considerable additional risk...risk that if realized, would suddenly become society's burden to bear. That's not a very responsible path to be following along...

[saganista]

Originally Posted by malamute

The other thing -- how many years do people have to work in order to collect social security?

You need at least forty quarters in which you earned at least the minimum in covered wages. The minimum is adjusted for inflation. In 2009, you'll need to earn at least $1,090 in a quarter for it to count as one of the forty. With the forty quarters, your pension benefit will then be calculated on the basis of total covered wages that you received over the entirety of your covered employment. Those who have worked longer will have earned more wages, and will receive a higher benefit.