Posted on 03/25/2002 6:31:56 AM PST by Matchett-PI
Those who consider investing in an index of, say, 100, 500 or 5,000 top US companies to be risky, never say where, should those companies fail, the money to pay Social Security taxes and benefits will come from.
You can buy insurance far better for far less than Social Security disability costs and pays.
I've done street fairs for years and met dozens on people on disability. It is horrible. They fight to get it, get just enough to starve to death on and, to avoid that, they work under the table illegally. One lady I know who has diabetes (she would shoot up behind my booth), lupus and cancer was tuned down 3 times for SS disability. They accepted her only when she was taken to the ER in a coma. But her problems were not solved. She had been on unemployment. Those people now claimed she lied about being able to work and she had to pay back what she had collected.
Private plans are far better than SS disability. I would not wish SSD on my worst enemy.
There are all sorts of worse-case-scenerios one can think of. What if ALL the insurance companies fail from whom people have bought their life/health insurance? There is no "fail-safe" solution to anything, regardless of the safe-guards put in by the prudent to guard against anything but catastrophic situations.
I'm all for allowing people to opt-out of the SS system, but it cannot happen all at once ... it will have to be phased out. The DemocRATS have created too many government-dependent mentalities that will have to die off because they will never change their minds about their "entitlements".
Generally only applied to other nobles.
"We're searching for something better, something more in keeping with the way we actually live."
It is possible that "the way we actually live" will turn out to be an unsustainable, self-limiting process.
Of course, any action has a RE-action. What are some of the ways you can think of that the dynamics of the market would be changed, for the better, or for the worse in light of the proposed privatization idea?
SS is not fatally flawed "because it did not adequately anticipate future rates of inflation or life expectancy." Its fatal flaw is its coerciveness. If one could freely buy and sell claims on future SS benefits, I assure you that the market mechanism would reduce participation and the price of the claim, thus raising SS returns to something reasonable.
Don't think anyone is assuming that. We can look to Chile and Great Britain to see what happens when privatization occurs. 60% have opted partially out in England and the capital unleashed and now at work is greater than the country's GNP. Chile is one of South America's success stories and much of that is due to investments in Chilean companies by Chilean worker's pension plans.
I agree with that but that isn't the point. Most people are missing the hidden agenda of big government and that is to keep as many people dependant as possible and never ever let people have control of their own money. We have very corrupt people sitting in both the House and Senate. They are about two things -- staying in office and holding on to and expanding their power. Keeping SS on the edge works for them. Fixing it doesn't, so I expect that 10 years from now, we'll be having the same empty conversation about the broken SS system.
Richard W.
You don't miss a trick. :) Regardless, that criticism can be applied to all good intentions.
It is possible that "the way we actually live" will turn out to be an unsustainable, self-limiting process.
In which case preparing for retirement will be moot. Always good hearing from you. :)
Chilean pension plans provide venture capital do they?
SS is not fatally flawed "because it did not adequately anticipate future rates of inflation or life expectancy." Its fatal flaw is its coerciveness. If one could freely buy and sell claims on future SS benefits, I assure you that the market mechanism would reduce participation and the price of the claim, thus raising SS returns to something reasonable."
Thank you for your analysis. I'm not informed enough on the subject to be able to intelligently counter your objections, if indeed there even are any sound arguments against them (other than the coercive one).
I think that we all would agree that the bottom line flaw in any sort of socialistic program run by the government is its coerciveness. But we are stuck with what we have and have to go from there.
What would you suggest as a *practical* solution, other than being able to buy "futures" if doing that would reduce participation?
Yes, the article can be dense on first reading but is so for completeness sake. A short summary would be, "Privatize all federally sponsored pension accounts, fund them with broad common stock indexes, full 40-year accounting is only time frame of any use, the resulting assets belong 100% to each worker, all will likely retire far wealthier than they would under the present system, at less cost and at an earlier age."
Stocks only marginally better than bonds. Not true. You must read the first article referenced at the bottom of the current article--see the tables in www.advanced-stock-selection.com/SocialSecurityDraft.htm. The worst case on record since 1871 was the forty-year period ending 1941 when stocks outperformed bonds by giving the retiring worker 40% more wealth in stocks than he would have gotten in bonds (and, of course, he or she OWNS the stocks--under the present system the workers own nothing).
Early retirement due to disablement would be funded out of a contingency fund build up from a fractional allocation of collected payroll taxes.
It is true that the trust-fund accounting is a fictitious artifact because the tax collections go into the government's general funds and are proportionally allocated to the Social Security Trust Fund. Usually the cash is not there--it's been spent somewhere else--so the government issues IOU's to the Trust Fund in the form of special Treasury Bonds. Ultimately, we the general taxpayers are the guarantors of the those bonds.
"If one or more companies in a stock index fail, where does the money come from to pay the private account holder upon retirement?" Index member companies have been failing for decades, ever since indexes were conceived. They are replaced by other chosen companies. Every failure is accounted for in the price of index every day. There are so many successful companies, they far more than offset the losers. It is highly risky to try to do that on your own with individual stocks of individual companies.
Yes, market behavior will be affected by the startup and ongoing operation of SSII, but gradually. And the free capital-exchange markets will bring it ever back into ongoing stages of equilibrium. It's a self adjusting mechanism. The future markets will fluctuate from extended periods of overpricing to underpricing and back again--as they always have in the past (unless the capitalist system of economics becomes extinct).
Thank you and other Freepers for your inputs.
-'Copernicus'
A Lousy Investment - Social Security made sense in 1935. In 2001 it's dangerously outdated.
TAXPAYERS VICTIMIZED: Social Security a Ponzi scheme sanctioned by the government
Social Security lies - Exclusive: Walter Williams reveals agency's historic deceptions
WHAT SOCIAL SECURITY TRUST FUND? - Quotes --There are some good links in the replies on this thread
Women and Social Security Reform
......and there's more, go HERE for more.
Frankly I don't see one. Politically impossible. There was a short window of opportunity near the top of the bull market, but it's gone.
Government undermines everything it subsidizes. Saving for retirement is no exception.
A nasty feedback loop has been powering up over the last few decades: Government subsidy of retirement will require greater taxation to fund obligations, and removes old age as an incentive to have (and be nice to) children. In order to maintain the social niche in which they were raised despite increased taxation, people delay having children, and have fewer when they do. This erodes the future tax base, requiring once again greater taxation per person.
The system will collapse of its own weight.
The one way out I see is massive immigration -- particularly immigration of the poor. It costs very little to raise a child in poverty, so the tax disincentives for having children is much less for them. But this does nothing to address the long-term destruction of the middle class, and is the road to looking more like, well, Mexico.
The Framers gave us a Republic .... saying, "IF you can keep it."
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