What is so bad about privatization of social security?

Question

I havbe heard it explained what it is and I don't see the problem with it.

I like wuxxler's answer, especially the animal farm referance.

The way social security is now wouldn't young people lose the most because of how people are living longer and so the can live for 20-30 years after they retire, meaning they live off the system for that long and allow less money for younger generations.

Actually I am of the belief thewre there are no safe stocks yet I still think there is something else you can do if social security were privatized.

Answer 1

I am a 50 year old male, who prepared for retirement the last 20 years by investing in the stock market. In 2001, the market crashed. Much of my portfolio was killed. I had a lot invested in two companies which went bankrupt. One of those companies was MCI, which was bankrupted by corrupt jerks like Bernie Ebbers.

Sorry, I am a little bitter about MCI....;-)

Anyway....now I have to depend on Social Security more than I had planned. Thanks to FDR and other democrats for starting it and keeping it. It is my lifeboat.

Answer 2

A little piece of info that I bet you do not know:
-----
In 1936, the federal government published an informational pamphlet on Social Security. It stated:

"…and finally, beginning in 1949, 12 years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay."

http://www.ssa.gov/history/ssn/ssb36.html
-----
Nothing like a multi-trillion dollar government lie to start the Social Security system. Yet Americans complain about corporations being corrupt liars. Enron and WorldCom could only dream of achieving this type of deception.

Their are two basic rules to investing money:
DIVERSIFY
RISK APPROPRIATE TO AGE

Because Daniel A did not have the brains to invest properly ---(I had a lot invested in two companies which went bankrupt)--- should not mean that I am forced against my will to participate in a multi-trillion dollar vote buying scam.

People like to talk about the stock market decline of 5 years ago. But the stock market is now approaching those levels again. A properly invested long-term portfolio would be right back on track.

SS has created two thing only:
Government dependence (which politicians love)
Financial illiteracy (which politician love)

If you remove personal responsibilty from people, the result is less responsible people. This should not be hard to figure out.

Another response said
>>>Do you really trust 200 million people with no financial education to manage their private retirement accounts well?
Since I am not an elitist snob who looks down on everyone - YES I DO.
Apparantly, he is smart enough. The rest of us are just too stupid.


“Few men desire liberty. The majority are satisfied with a just master.”
-Gaius Sallustius Crispus

I have no desire for a just master.

Have a good day.

.

Answer 3

Twelve Reasons Why Privatizing Social Security is a Bad Idea
4/2004

Addressing Social Security’s potential long-term financing challenges by taking the dramatic step of diverting its payroll taxes to create new personal accounts will have drastic consequences for federal finances, future retirees, and those who rely on the system the most. Learn more about twelve major reasons why less costly and less painful reforms should be considered instead.

Reason #1: Today's insurance to protect workers and their families against death and disability would be threatened.

Reason #2: Creating private accounts would make Social Security's financing problem worse, not better.

Reason #3: Creating private accounts could dampen economic growth, which would further weaken Social Security's future finances.

Reason #4: Privatization has been a disappointment elsewhere.

Reason #5: The odds are against individuals investing successfully.

Reason #6: What you get will depend on whether you retire when the market is up or down.

Reason #7: Wall Street would reap windfalls from your taxes.

Reason #8: Private accounts would require a new government bureaucracy.

Reason #9: Young people would be worse off.

Reason # 10: Women stand to lose the most.

Reason #11: African Americans and Latin Americans also would become more vulnerable under privatization.

Reason #12: Retirees will not be protected against inflation.

Answer 4

Really the main point Democrats like to expound upon is that there is risk of loss in the stock market, and not everyone would be able to invest wisely. It's funny hearing Senators who themselves are invested in the stock market say this, and I think it's safe to say, they're doing pretty well for themselves. I'm going to expand upon this answer and talk about why I believe the Democrats are wrong about this.
First of all, concerning the risk of loss. Over the past 70 years the S&P 500 has achieve 9% annualized returns. I don't know about you, but that sounds pretty secure to me. Granted, from month to month and even sometimes from year to year the markets can be very volatile and can sustain losses. However, this is SOCIAL SECURITY we're talking about. This is not investing for one year, it's investing for decades. These accounts can be regulated with diversification rules in place so that we can even prevent people from being stupid by putting all their eggs in one or two baskets. I find the Democrats' insisting that the regular person is unable to understand the stock market and make money off it to be insulting. We are America, a nation with a great spirit of self-reliance and independence. We ought to allow people to control their own earned money. Also, how much money you have at the end will have little to do with whether the markets are up or down when you retire because you will invested over the course of decades. One swing in the market at the end will not even come close to erasing the gains made over decades. Furthermore, I read someone else's answer that privatization of social security will a) create a new bureaucracy and b) slow economic growth. I find both of thos points preposterous. First, there will be no new bureaucracy, the same bureaucracy will be in charge of privatized accounts. Also, by increasing participation in the stock market, economic growth will likely accelerate. Liquidity will be added to the market along with more market participants meaning that the incentive to invest in business is greater as original investors (venture capitalists) have a greater market by which to make an exit. Also, because the stock market yields greater returns than the social security fund does, people will have more income which can lead to more consumption which will trigger economic growth.
Social Security will go bankrupt if nothing is done, and the Democrats have to wake up to this fact. In order to sustain Social Security in its current form, taxes will have to increased and benefits will have to be decreased (this is not political banter but is widely agreed upon). The Democrats will likely doom our economic well-being if they don't show willingness to fix this problem. Back when Social Security was initiated there were 16 workers paying into the system for every one person taking out benefits. Now there are 2-3 workers for every one person receiving benefits. Also, the average black male actually LOSES money by contributing to Social Security (this is also a fact, feel free to look it up). These conditions are intolerable. The politicians in Washington need to stop pointless fighting and start solving problems. They ought to compromise by increasing the contribution cap slightly and partially privatizing the accounts. The contribution cap is a limit on the amount of money you have to pay. Once you pay in a certain amount to Social Security you don't have to pay anymore. Preferably, the cap would not have to be raised, but because the Democrats have demonstrated their unwillingness to make meaningful efforts to solve a big problem, this compromise seems like the only way we would be able to get anything done.

Answer 5

Unfortunately our democrats will never allow it Galveston Texas was able to opt out of the system in the 80's they are receiving 2 to 3 times the monthly payments SS recipients get. Chili tried to emulate our plan but abandon it when they realize it would not work they privatize it and it working a lot better. our politicians are more about control than what's in the best interest of the American people one party tried partial privatization but was shot down by the other.

Answer 6

The problem is in 10 years or so, when 20 Million people hit Social Security age and they have no money in their private accounts then the US government will end up picking up the tab, and every other tax payer has to foot the bill. Do you really trust 200 million people with no financial education to manage their private retirement accounts well?

Answer 7

The problem is Americans are stupid. We cannot be asked to be responsible for ourselves! It's unfair! Some people will make more money than others! It's unfair!
We need a good Democrat led government to take care of us, to hold our hand and guide us, to tell us what to do and think, and how to live. Only then will all men truly be equal.

Of course, as Orwell says, some will be more equal than others...

Answer 8

Nothing is wrong with privatizing social security,in reality you will get more money than you would with the currnt pay-as-you go system.

Answer 9

Ever lost money in the stock market? Enough said!

Answer 10

i think the problem people see with it is, all the money could be lost in the market. but the way things are going, all the money will be lost to baby boomers...