social security reform???

This is quite a good article about the history of Social Security in this country.
It brings up agruments for and against the current system.

But with increased freedom may come increased risk - and that's perhaps the nub of the debate over Bush's programs. What's the proper role of Washington in ensuring the security of US citizens? How much should Americans simply depend on themselves?

Opponents say Bush wants to unravel a safety net that's worked well for more than half a century. Proponents say he is simply promoting the national credo of individualism.

www.csmonitor.com...

Although I am worried that the new plan will be a financial disaster for me and many other Americans 45 and older, I have hope that it will be years before all the kinks will be ironed out:

What if many of these personal accounts fail, and today's young people are left indigent in old age? What about people with little financial literacy who can't even pick from a simple set of mutual funds? Will government curb excessive commission fees imposed by private pension funds?

Resolving those types of questions will be necessary before Congress can seriously consider his plan.

www.csmonitor.com...


www.csmonitor.com...
www.csmonitor.com...

An update now that Bush is on the "campaign" trail promoting his SS plan:

Indeed, surveys show that views are still fluid, and poll results often depend on how questions are asked. In a Newsweek survey taken in the two days after Bush's State of the Union speech, 56 percent of Americans said they are wary of putting retirement money into the stock market. In another poll, by CNN/USA Today/Gallup, 66 percent of people who watched Bush's speech said his Social Security proposals will move the country in the right direction. That was up from 51 percent of Americans surveyed before.

www.csmonitor.com...

I'm still waiting to see if this plan is gonna protect those 40 and older who cannot benefit much from private plans.

Someone on TV said they had read Bush's "actual plan." Can anyone here link that?

Well, I don't know if this is the actual "plan" but it does outline key points:
www.whitehouse.gov...

www.whitehouse.gov...

Of course, I having trouble believing anything coming out of the WH on social security. I've had this feeling as long as I've been old enough to be concerned about my old age, probably the last 15 years.

Originally posted by DontTreadOnMe
Well, I don't know if this is the actual "plan" but it does outline key points:
www.whitehouse.gov...

I don't think there is an actual specific plan at the moment. Defender's have been saying to each and every criticism on the news talk circuit I've seen... everything is "on the table."

As far as people's best guesses go, the worst aspect I've heard yet is aside from risking your own funds and the solvency of the entire program, nothing changes in the amount you could get or your control of it.

It's just a government run version of an annuity. Should you actually make money (not guranteed), the government still controls giving it to you, how much and at what age...for your own best interests of course.

Meaning the whole point was just a coup for Wall Street. You don't matter.

But I suppose that's "on the table" too.

Best thing we can do is express our dire concerns often, loud and unified. Avoiding the "social" diversions would help too. This one can't slip through without some serious review and non-partisan support. We're talking about the future. Not winning some argument.

My question occurs to all these is who and how the money from social security will be handle, which investment firm will get its hands in the pot when it becomes "privatized"

[edit on 6-2-2005 by marg6043]

I'm still undecided if the President's ideas are good or bad ideas. Touring the nation with a bunch of prescreened people who already agree with him might convince a few people that his way will work but not me. I want to see more numbers and more information. I've read that if the economy grows the same as it has for the past 75 years that no change is even needed to the system. Therefore the need to change the system is controversial by itself in my opinion. If I could totally opt out of the social security tax and receive a refund for all the money I already put into the system I believe I would. However I hear of nothing like that.

Anyway you look at, it sounds like all of the younger generations are going to lose money on all of these proposals. The debate is really how much is everyone going to lose and how much does the government get to keep on these social security taxes. Some of the proposed changes or ideas would leave retirees with only a tiny percentage of benefits payable from the government. The hope as I've read it, is that your private account will help to make up some of the difference.

I've read the paper copy of BusinessWeek which has some pretty good graphics or tables to illustrate how much you stand to lose. Here are some links to the online version.

www.businessweek.com...

Just so no one thinks I'm making any of this up, a search revealed social security benefits will be cut by 40% from the current levels by 2075 according to information in BusinessWeek.

Just to stress another point stated within the link above, according to the SSA or Social Security Administration, there will be no shortfall at all in social security if the next 75 years growth rate simply matches the past 75 years growth rate. As pointed out by a finance professor Jeremy Siegel, if you don't get high enough growth rates, then you won't get the 7% return on stocks either that these personal accounts count on.

If you ask all of the generations that aren't going to get their benefits fixed, then ask them if they know that they will lose money under a new plan, they may have a different opinion of any plan. However it may be better to plan for a decrease now rather than have the government suddenly have to cut our benefits years later in retirement. I would like more details and more numbers.

Edited note: There are some additional arguments for change. Apparently some ideas are that your descendants will be able to use the money in your personal accounts after you have passed away. That is if you haven't depleted the funds already.

[edit on 6-2-2005 by orionthehunter]

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If you want to invest in the stock market for retirement we already have 401ks, IRAs, ROTH IRAs, Simple IRAs.

The only reason for this is Wall Street brokerage houses are getting payback from Bush.

This will cost 1-2 or more TRILLION dollars just to set up!
Not a single benefit will come from this set up money.

Additionally the whole program will be perpetually more expensive to administer.
Can you say 'Brand New Bloated Bureaucracy'?

We need to dig a hole to supposedly 'save' SS, which is not in any particular problem for several decades into the future?

This sounds like judicial reform that proposes to blow a hole in the jail house wall.

If this is reform I don't think i will need it.
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I suppose they could always stop wasting money on senseless immoral wars and making the Halliburton empire richer and use it instead to benefit the people - but that doesn't suit their agenda does it ?

I see nothing wrong with taking controll of your own retirement fund. Americans might be happy to gamable there future on the stock market but I would rather put my money in the bank and let the interest built.

Of course the brainless politicans would tax your retirement fund so by the time your 65 the government has chewed up your financial sercuity!

Xpert, if you want to take control we already have 401ks, IRAs and ROTH IRAs. SDocial security was meant to be a safety net. It should supplement your own investments.
YOu have to take into account that not everyone will make $$$ in the market. To me, the market is little better than gambling. I do have retirement accounts of my own. In NO WAY could I exist solely on those moies though.

~~~~~~~~~~~~
Orion,
Thanks very much for that business week link!!!

Originally posted by xpert11
I see nothing wrong with taking controll of your own retirement fund. Americans might be happy to gamable there future on the stock market but I would rather put my money in the bank and let the interest built.

Of course the brainless politicans would tax your retirement fund so by the time your 65 the government has chewed up your financial sercuity!

You would have as much control as a sheep in a chute that ends at the slaughterhouse door.....you can turn your head, but the destination is predetermined.

Here's the fact from what's been given up for media consumption:

The actual breifing by a Sr.Bush Official laid out the truth: it's a speculate & hope stategy that only has you equal to & better off by using the highly speculative stock market - the "safe bet" options don't give the return being promised.


Here's THE quote: "In return for the opportunity to get the benefits from the personal account, the person forgoes a certain amount of benefits from the traditional system. Now, the way that election is structured, the person comes out ahead if their personal account exceeds a 3 percent rate of return" - after inflation - "which is the rate of return that the trust fund bonds receive. So, basically, the net effect on an individual's benefits would be zero if his personal account earned a 3 percent rate of return."

Translation from Paul Krugman: "If you put part of your payroll taxes into a personal account, your future benefits will be reduced by an amount equivalent to the amount you would have had to repay if you had borrowed the money at a real interest rate of 3 percent.

For years, privatizers - including Mr. Bush - have claimed that people would do better with private accounts than with traditional Social Security even if they played it safe and invested in U.S. government bonds (which yield 3 percent after inflation).

But the official at the briefing made it clear that his boss was fibbing: if you invested your private account in government bonds, you would face benefit cuts equal in value to your investment, so you would be no better off than under the current system.

The only way to get ahead would be to invest in risky assets like stocks, and hope for higher yields. But if the investment went wrong and you earned less than 3 percent after inflation, your benefit cuts would leave you poorer than if you had never opened that private account.

So people are expected to take a loan from the government and use it to buy stocks, and if that turns out to have been a mistake - well, too bad.

Peter Orszag of the Brookings Institution got it exactly right: "It's not a nest egg. It's a loan."

As with all things BUSH, if you're enraptured by soundbytes & captivated by shiny objects, this sht makes a ton of sense.

[edit on 7-2-2005 by Bout Time]

Even IF Bush's plan were to work, it wouldn't help anyone now working. It wouldn't be a viable plan for almost 100 years. In the meantime, citizens would be making do with less--as usual. The stock market and government seem to be the beneficiaries here:

Are private accounts really a good idea? The short answer is, they could be -- but only if Americans are willing to wait several generations for the higher returns to make up for Social Security's expected shortfall. The gap is so large -- $3.7 trillion in today's dollars -- that even if the stock market matched its historical average, private accounts wouldn't fill the gap for something like 90 to 100 years. And that doesn't even count the extra $1 trillion to $2 trillion in transition costs required to set up such accounts.

--from Orion's link:
www.businessweek.com...

Yes, let's take 1-2 trillion dollars more away from social security, (which is usually how the fund their budget deficits), in the guise of saving social security, and then let's give the money, and much more to the corporate world!!! Social security will be around at least the next four years, why can't we hold off until at least the powers that be can sound sane when they present their plan to us?

oh, by the way, before social security was founded, most people worked until they died, or ended up in crappy poorhouses, or lived with their children and were taken care of by them. Although they all had lower taxes and every opportunity to save.....and most were really good at saving. Why do you think that you'll be so much more successful at the game than your ancestors?

as far as how his plan would work, well, I heard that anyone I believe 55 or older will stay in the present system and be guarenteed benefits more or less equal to that today....(as long as the government deficits don't eat into all that is in Social Security Reserves and start taking a bite out of today's contributions also)......But, anyone under that age, well, there will be no guarentee about how much you'll be getting, and, you'll probably be getting something now matter what happens....but, it won't be equitable to what it is today. Thus the idea of the savings plans....consisting of investment opportunities like bonds and stocks, selected by our government....(wonder how much it will cost in campaign contributions to get your name added to that list!!!)...so, when all is really said and done, you cannot personally, chose what investments your personal savings will consist of, although I am sure, that they will give you a few choices of their favorites. And, of course, Bush shows not inclination of really keeping the deficit down, which will only put those reserves in a more questionable state and weaken social security even more. But, of course, he will feel absolutely no guilt, because he's the one who gave you that personal account that will save you tail when they tell you that your social security for the month is a whole $5.00 (if you've invested wisely, and managed to avoid the three out of the five stockfunds that were raped by scam artists!!)


The first step to saving social security if for our government to stop taking from it's funds! Then, the second would be to put some of what they took back.


[edit on 7-2-2005 by dawnstar]

I am sorry if my orginal post wasnt clear I agree that putting money on the stock market is pretty much gambling. Like I said put the money in the bank and let the interest build that is a safer option apart from government taxs.

Didn't the depression begin because of some sort of loan program, so people would invest in the stock market also?

Originally posted by dawnstar
Didn't the depression begin because of some sort of loan program, so people would invest in the stock market also?

I think you're thinking of the low margin requirements in place in the 20's. Margin allows people to use stock as collateral to buy more stock, so a small decline in share prices can wipe you out since your initial investment has been so heavily leveraged.

This has nothing to do with the personal accounts proposed by the President.

Personally, I'd just assume abolish the whole program....currently Social Security is a government-run pyramid scheme.....Also, there is no money in the Trust Fund. Administration after administration has looted money from the trust fund and replaced the money with government IOUs (which are not tangible assets that can be "cashed in"). These IOUs will have to be repaid by the government at some point.....either by borrowing the money or raising taxes.

Why not simply set a year....if you're born before this year, you will get your benefits that have been looted from working Americans. If you are born after this year, you are on your own for retirement. This way, we can phase it out completely and chip away at the welfare state.

Also, I'd recommend that everyone read "Rich Dad, Poor Dad" by Robert Kiyosaki. In it he explains that simply putting money in an IRA or 401K every month is not investing....profit generated is simply not that much....it's no that different from simply putting money in a savings account.

as posted by RANT
Best thing we can do is express our dire concerns often, loud and unified. Avoiding the "social" diversions would help too. This one can't slip through without some serious review and non-partisan support. We're talking about the future. Not winning some argument.

I wholeheartedly agree, RANT.
Excellent points, especially the last two sentences of what you mentioned.



seekerof

Well even though I stated this earlier "according to the SSA or Social Security Administration, there will be no shortfall at all in social security if the next 75 years growth rate simply matches the past 75 years growth rate" That statement doesn't take into account reality as we know it or many would like to believe. The reason is simple. There is only a theoretical Social Security Trust fund which has been building up to pay for the years when Social Security takes in less money than it pays out. In other words our government has been writing a bunch of IOU's instead of actually saving money. This makes sense in a pay as you go system where no savings built up before the first retirees started collecting.

Years from now, this increase in payments to Social Security would increase the budget deficit by over 1 trillion dollars each year if nothing is changed. That 1 trillion per year would be just to pay for Social Security and no other debt if our government had a balanced budget. Having such tremendous deficits would ruin our economy by driving up interest rates which would result in raising the cost of your credit cards, mortgages, and all other forms of debt. So what I'm saying is I do see a major problem that will cost us.

I read an article in Time magazine about Social Security and I tend to agree with their assessment. However they also stated that Social Security is not a crisis yet. There is some time before the debt is due and I believe the total projected debt we owe will be something like 10.7 trillion dollars. The Medicare prescription drug benefit is the real crisis I read where money problems will appear next year I believe I read and the debt burden from that prescription deal alone will cost 17 trillion dollars due soon. Apparently, our politicians have already dug us a big hole (make that a humongous sinkhole) and our government hasn't saved a dime to fill it in. Therefore, I think I may be willing to take whatever control I can over my future savings. As a taxpayer, I am a bit upset about how well our government has managed our money we pay. They call a plan Social Security and then dig a 28 trillion dollar hole.

On the bright side at least there is discussion on the topic now. I am not in favor of raising my taxes 2% to fix the Social Security system like the democrats are proposing. My 2% savings of my own wages will be a lot more I believe than the government plans on paying me back.