Saving Social Security

Quote: beachbumbabs

The main issue, as I understood it, and personally I agree with it, with Bush's plan was the risk tolerance was too high for subsistence money.

The Bush plan was to allow individuals to invest 2% of the 15% they contribute, the other 13% would not be affected. The 2% would be the individuals, forever. They would get a lower benefit, of course.

Liberals in congress would have none of this. People keeping their own money and building their own wealth! The same liberals who applauded Bill Clinton who suggested the government invest SS funds in the stock market just a few years before!

Sad part is the plan would have most helped the lower classes and Blacks who are less likely to pass wealth to the next generation. The plan would have been 100% voluntary.

Democrats really looking out for the poor. NOT!

Where was all the private investing before SS? Why would it be different next time around?

Quote:

Before Social Security, in 1934, roughly one half of seniors were estimated to be poor. Most had to rely on family or friends, or go to the poor house. As ever more seniors paid into Social Security and then received retirement benefits, the poverty rate among seniors steadily declined from circa 50 percent in the Great Depression to 35 percent in 1959, 25 percent in 1970, 15 percent in 1975, and around 10 percent in 2000, where it has hovered ever since. Today, were it not for Social Security, the senior poverty rate would be 43.5 percent, and just over half of elderly African Americans (51 percent) and Latinos (52 percent) would be poor.

https://www.nasi.org/discuss/2015/08/social-security’s-past-present-future

It's funny how people only argue in favor of the private account option when the market is going well.

Quote: Wizard

It's funny how people only argue in favor of the private account option when the market is going well.

I've argued for it since I was old enough to be aware of the issue. If you include the market as 10 year intervals, yes, you are correct, because the market has done well in all of them. If what AZ is saying is true, and it was only supposed to be an option for 2 of the 15% the government "invests" for me, then what person receiving social security would be receiving less had they invested in a passively managed ETF/mutual fund like SPY? It's an easy answer....... NO PERSON would be doing worse! ALL Americans who would have opted to do it on their own would be doing better! ALL!

If you want to say what about the person who would have shorted plutonium mining stocks, well, then, you got me....

I think that even in less than stellar markets a privately controlled fund is better than some government run program. Sure some people won't have much in the way of profits and some may make mistakes that are critical but its good to have non-governmental funds.

People refer to 'safety nets' and sometimes they are needed but often the best option would be to invest in job retraining programs so people can earn good money and contribute to both private funds and the social security program. Job retraining, education, entrepreneurial programs. Usually the government screws these up too much but they work better than thinking a convenience store clerk is going to be making a sufficient contribution to the social security 'fund'.

One of the weirdest government programs I ever heard of was the City of Paducah which sold many derelict properties to gays and artists who revitalized the downtown area's buildings and garbage strewn lots. The city and its banks then made a profit on the remaining derelict buildings and all the taxes the successful bars, restaurants and art galleries were paying. It remains essentially a private enterprise activity but did use coercion to force some poor people out of code-violated houses.

Quote: Fleastiff

One of the weirdest government programs I ever heard of was the City of Paducah which sold many derelict properties to gays and artists who revitalized the downtown area's buildings and garbage strewn lots. The city and its banks then made a profit on the remaining derelict buildings and all the taxes the successful bars, restaurants and art galleries were paying. It remains essentially a private enterprise activity but did use coercion to force some poor people out of code-violated houses.

That is called "recruiting the 'creative class.'" Idea is that the artist types like or tolerate a cheap place to live as they try to come up in the art world. You get enough of that and the place gets "trendy" and attracts folks who do not want suburbia but will not live in a slum. It then feeds on itself. Results have been mixed on a large scale.

Quote: Wizard

It's funny how people only argue in favor of the private account option when the market is going well.

Quote: SOOPOO

I've argued for it since I was old enough to be aware of he issue. If you include the market as 10 year intervals, yes, you are correct, because the market has done well in all of them. If what AZ is saying is true, and it was only supposed to be an option for 2 of the 15% the government "invests" for me, then what person receiving social security would be receiving less had they invested in a passively managed ETF/mutual fund like SPY? It's an easy answer....... NO PERSON would be doing worse! ALL Americans who would have opted to do it on their own would be doing better! ALL!

I am also one who was and is always for it. For most people you are talking $1,500 a year or less put in your private account. But look at that over time. Assuming someone starts at age 25, that is 40 years of investment. $60,000 in principal alone, at even a single digit rate of return which I am not going to plug in the numbers on a Friday night, but I would say you are talking about $200K+ as a nest egg when you retire. Inflation value of course would eat into this, but the same would increase what is going in as wages rise. So call it $200K.

The best part, even if best in a dark way, is people who die early. Die at 63 and all that SS is gone, no wealth to pass on to kids, a spouse, or your favorite charity if you wish. Now, would $200K help out someone's middle aged kids? Again, the groups Democrats "represent" would have been helped the most! Higher income people already put money aside for themselves.

By now, we would have almost 15 years of people with these accounts. It would have been wonderful. Except the dependent class, the "47%" would be smaller, not good if you depend on them to vote for you.

Quote: AZDuffman

I am also one who was and is always for it. For most people you are talking $1,500 a year or less put in your private account.
Higher income people already put money aside for themselves.

Good point. For me the extra 1500 would have been icing on the cake. For poor/middle class people it would have been the cake. Shortsighted Dems cost those people a nice nest egg. No other way to look at it.

Quote: Wizard

In addition to volatility reasons, I oppose investing Social Security savings into the stock market because we need that money to pay for our deficit spending.

I agree even though I kind of liked the idea - certainly for myself personally, would have loved it.

Quote:

In other words, the Social Security trust funds, which are in the trillions, really don't exist. It is just a burden future generations will have to pay. If we must have an enormous debt, at least we owe some of it to ourselves.

Maybe there is something about this that is different and I just can't see it, but I have always felt this concern is a bit of a canard.

In a capitalist system, the money is never actually there. If half of us tomorrow go to our local bank to take out our money, guess what? It is simply not going to be there. FDR, way back when, had to explain to people over the radio when he wanted to reopen the banks, that banks don't work that way. Paraphrasing, he said "The bank does not take your money and lock it away in the vault" like some might have imagined.

So we want our SS money to be locked away in a vault? That is just not going to happen!

Quote: odiousgambit

So we want our SS money to be locked away in a vault? That is just not going to happen!

Many of us want the death penalty to exist, to be imposed and to be carried out, but we don't want wardens to carry out executions without having been served a warrant of execution commanding him to do so. We all realize that there are procedures and that is what we want to be reliable.

We want a bank to have enough cash on hand to meet OUR withdrawal. We want the funds to be advanced to meet the Social Security obligations. We do not want to hear politicians saying that "the funds" have not been voted into the proper accounts.

Its the same way during a snow storm or hurricane. The Treasurer may not have any money in the proper accounts but the spending is to take place and the money is to be later transferred from some general account to pay for all the overtime, maintenance repair, emergency purchases, etc. Men and machinery are pushed beyond reasonable limits and money is spent from empty accounts but afterwards things get formally funded.

Its just that at some point in time the General Fund is empty and the conflicting demands are so high that there is a general breakdown, such as an impending bankruptcy of Illinois or the much rumored bankruptcy of social security. China keeps buying our bonds because they are a heck of a lot better than buying Chinese bonds but at some point in time someone will wake up and realize the promises are not worth the paper they are printed on.