what is privatizing social security?

Question

What are the good things about it?
and what are the bad things about it?

When I die, do my money go to my kids or the GOVERNMENT.

Answer 1

Currently, the federal govt collects payments from everybody, and puts it in a big fund like a group retirement plan. When people retired, they get payments out of this fund.

The idea behind privatizing social security is to take the government out of the banking business. Essentially, each person would be allowed to save or invest their money privately, rather than being forced to pay into the government group plan.

Some proposed models require the same payments, but allow the individual to choose which fund to pay, while others make payment optional entirely. In other words, if people didn't want to save for their retirement, it would no longer be mandatory.

The downsides are that some people will reach retirement age with nothing, if they don't choose to save. Those who believe it's the role of the government to provide financially for the population see this as a bad thing. Those on the other end of the spectrum believe it just holds people accountable for their choices.

The other potential problem is that it leaves open more possibility for fraud, or that another financial scandal might cause one of the private retirement funds to go bankrupt, either causing potentially millions of people to lose their retirement investment.

The counter to this argument is that the US government isn't particular good at managing money, and most estimates hold that the Social Security fund will itself be bankrupt within 30-40 years. So, the argument goes, if we know the government plan is going to fail, we might as well allow people to opt-out of it now.

Answer 2

Social Security is a safety net - never meant to replace saving for the future. The only bad thing about Social Security is that funds are being diverted for other purposes and not used for the purposed for which the money was collected -- not conservatively invested to cover future needs with changing demographics. Good information and charts are available on the links below.

The problem with privatizing SS is that it further loots the trust fund to establish private accounts. Individuals are not precluded from having private investment retirement accounts now -- in fact everyone is urged to save for retirement needs. But circumstances make saving impossible for some (like food and medical expenses). And some don't invest so wisely -- think Enron and the 1929 stock market crash. In fact the '29 crash and depression illustrated the need for a safety net and inspired Social Security. Of course this safety net would be destroyed if money is diverted to support private brokerage accounts.

Social Security has been a model of efficient, low cost, low fraud program serving people. Adjustments should be examined and made as they were during the Reagen years. For example is is a safety net so perhaps there should be a ceiling and funds not paid to those who don't need the safety net or perhaps the the FICA taxable income level should be raised so income is taxed to $150,000. There are ways to shore up the system. Privatizing SS would be criminal.

One last item: A Social Security Board of Trustees should be empowered with one responsibility -- protecting the SS Trust Fund and safely investing it. Trustees should not be political appointments or members of the President's Cabinet. This should be APOLITICAL.

http://www.ssa.gov/OACT/ProgData/funds.html
http://www.ssa.gov/OACT/STATS/table4a1.html

Answer 3

It means instead of basing the returns on tax revenues they would be tied to investment in publicly traded instruments. The downside is there is no guaranteed return. The up side is you are not locked into a low return and the potential for exponential returns is excellent.

People are afraid of losing all of their money on the stock market. But what should be kept in mind is that in no 30 year period of time has the stock market had negative returns. Investing in a diversified or index fund is not dangerous because you are not putting all of your eggs in one basket. The economic benefits would be tremendous.

Unfortunately most people who oppose it have no idea how investments work. If you were to take the same amount of money you paid into Social Security over your working life and invested it in an index fund keyed to the Dow you would be so much better off than you are today. Over long periods of time the stock market has yielded fantastic returns.

The government is a horrible investment. Just look at their balance sheet.

Answer 4

privatizing social security is .. people have the choice to invest their own money into their own retirement,,,,

Right now.. all people who work in a legal job pay into Social Security, the government mandates how much each person sets aside to it. The person as no control. In theory what is suppose to happen is the current working population is suppose to be paying for the current retired population. However, with people living a lot longer, and the birth rate going down, there is now a mis match, and not enough money to pay out, the Social Security is shrinking.

To privatize it means, each individual can opt out, and take care of their own retirement. So instead of the government handling my retirement, I do... I have the freedom. Isn't the US about freedom? I know I can invest my money a lot better then the government can,

And for those who feel they can't trust themselves to do it on their own, they can keep their social security and keep paying taxes into it...

Answer 5

Privatized social security people handle their own investments, the theory being they can get higher rates of return. Reality is the gains are eaten up by brokerage fees which average as high as 30% in England after they privatized theirs.

Government run Social Security runs at something like 1.5% overhead--a wonderful efficiency rate. The focus of privatizing social security is to direct all those brokerage fees to Wall Street, a big Republican campaign contributor.

Answer 6

because it truly is at present Social protection will run out of money. you assert there is not any threat to that. end of argument. No truly inspite of the undeniable fact that how can there be no threat if it is going broke formerly you retire? won't be able to you spot why we snigger on the way you imagine. There are such issues as pension plans. some are doing ok proper no longer none are broke and maximum will be ok if the marketplace recovers, no longer by technique of volume yet by technique of money fee. once you commerce 10,000 stocks at $5 it isn't like figuring out to purchase and promoting 10,000 stocks at $fifty 5. There are issues referred to as annuities. they don't pay as a lot as a 401-k yet they don't bypass broke except you tie them to the marketplace index and it crashes. you may decide on the plan you desire and the authorities doesn't have any administration over you funds. So there is not any threat in Social protection even as i'm in threat of loosing all of it. We truthfully opt to get Democrats out of Washington for a lengthy time period. Pardon me if i do not employ you as a economic adviser.

Answer 7

Well, first you will get a lot of Dem/ rhetoric that it's a plan by Bush to increase the wealth on big business, but it's not that at all.

It is the realization that the current system is a failure and that investing money in our countries economic system will have good short term effects for the economy and good long term effects for the investor.

Bush's plan did not do away with the current system, it just allowed the option to put some of you money in a different kind of system.

By shooting it dow, Democrats are basically saying, " Hey america, you all are too stupid to know what to do with your own money, but we can spend it for you in the right way."

Unfortunatly, the SS system is on a one way track to ultimate collapse, not a question of if, but when.

There will come a day when there are more people taking out than putting in, and unless the current taxpayers are willing to give over 50% of their income into the system it will fail, and I certainly don't want to give out 50% of my income, to only recieve 1% of it back when it's time for me to recieve SS.

The SS is the most un-even return on investment in history.
You could get a greater retun out of a simple savings account.

Answer 8

The Social Security System (SSS) runs at a surplus of $100-$120 billion annually and will continue to do so throughout the twenty-first century! THIS IS WHY THE BUSH JUNTA WANTS TO LOOT SOCIAL SECURITY--IT'S WHERE THE BIG MONEY IS! Dubya is now LOOTING this Social Security surplus by spending the money on weaponry manufactured by his defense industry cronies! As usual, Bush II is LYING to try to wreck the entire Social Security System. He's telling the American public that the Social Security fund is NOT a separate fund in trust to the 32 million older Americans whose lives depend on it.Privatization schemes are PIRATIZATION scams. The same Wall Street firms who contribute big bucks to the campaigns of presidents and senators now want to loot the Social Security System of trillions of dollars and jeopardize the survival of millions of retired Americans. It would be insane for Americans to allow Wall Street brokerage firms to handle the Social Security System trust fund. These same brokerage firms now manage private pension funds by investing the assets in their own stocks and bonds swindles, often leaving insufficient money in place to pay pensions. Having stolen the presidential elections in 2000 and 2004, George W. Bush now wants to steal the taxpayers' social security funds as well by having them invest their future retirements savings in Wall Street. The Bush plan calls for diverting 2% of today's workers' Social Security payroll taxes into private Wall Street accounts. Bush and his Wall Street flunkies want you to think that this refers to a measly 2% of the entire Social Security reserve fund, but it actually means 2% of the 12.4 percentage points of total salary that now go into Social Security payroll taxes--one-sixth of the total payroll tax money. Under this scenario, Social Security would lose one-sixth of the money that now flows in, representing a staggering $74 billion loss to Social Security the very first year!Bush is saying that he won't cut off people from Social Security who are already receiving it. And we can believe him, right? (Think weapons of mass destruction.)

In the face of such unmitigated criminality, American citizens must do everything possible to save Social Security--and our lives.

Answer 9

It means letting you invest your own money and hopefully get a bigger return, if not, you're f***ed. It's good if you aren't a complete retard, but bad if you don't know the difference between a stock and a CD.

Answer 10

It's investing in Enron !