Social Security - your thoughts?

[lawgator1]

The same people are on the hook, us the taxpayer. SS has already failed.

I'm just saying that privatizing it, in whole or in part, has risks which have to be considered.

Why do the investment vehicles have to be something which may fail?

I am unaware of any investment vehicle that has an absolutely ZERO risk, much less one with a suitable rate of return.

 

[hog88]

Why do the investment vehicles have to be something which may fail?

He probably doesn't know about the federal governments TSP program.

 

[hog88]

I'm just saying that privatizing it, in whole or in part, has risks which have to be considered.



I am unaware of any investment vehicle that has an absolutely ZERO risk, much less one with a suitable rate of return.

Still don’t see why everyone couldn’t have a government TSP assigned specifically for them - just like we already do with Federal employees and Military.

Thrift Savings Plan (TSP): How It Works and Investments

A thrift savings plan (TSP) is a retirement investment program open only to federal employees and members of the uniformed services.

www.investopedia.com

- The contributions are the employer/employee withholdings.
- The allocations are conservative, and target based.
- The disbursements are time bound and restricted.

 

[McDad]

I'm just saying that privatizing it, in whole or in part, has risks which have to be considered.



I am unaware of any investment vehicle that has an absolutely ZERO risk, much less one with a suitable rate of return.

That's interesting. How many searches have you done for such vehicles?

And, what is a reasonable rate? doesn't it at minimum have to match the SS rate of return?

 

[InVOLuntary]

The issues being argued seem to be that (1) the undistributed benefits should belong (or not) to the workers instead of forfeited to the government AND (2) that investment options need to be available for participants. And of course the funding to pay for those that don’t pay in what they take out would collapse.

#2 could actually happen and equity markets would soar. If it were to happen then it would be interesting to theorize what happens to debt markets after a lot of the self directed investment choices were picking the option of owning debt instruments. That’s more debt on the open market (and interest rates should fall with the supply/demand imbalance) - BUT right now it’s 100% debt so slicing off a portion that to go into equities makes the entire debt pie smaller and therefore higher interest rates w/b the result.

I have a self directed IRA now that I had from an employer many years ago. I can't contribute to it but I can buy/sell stocks/bonds/mutual funds. I can take out of it but at a penalty. (I know you know all of this) It could be the same but without the option to take it out at all. Also, people are stupid so they would probably make stupid investments so you could limit what was available to own.

I would love see a study what an average retirement account would look like if the SS dollars were put into an account tied directly to the DJIA.

 

[McDad]

Fun to discuss. Sad to see how many people lack vision with SS when those same people invest in retirement outside that system.

But like all we discuss, we can do nothing to change it and it is all simply a distraction from our day.

 

[hog88]

That's interesting. How many searches have you done for such vehicles?

And, what is a reasonable rate? doesn't it at minimum have to match the SS rate of return?

Now, LG does have somewhat of a point. Whoever controls large sums of money could be corrupted, just look at the federal government.

 

[McDad]

Now, LG does have somewhat of a point. Whoever controls large sums of money could be corrupted, just look at the federal government.

I agree. Even though Monty disagrees, everyone is currently "investing" in an organization which has 35T in immediate debt with no signs of slowing down. That sounds very risky to me.

 

[hog88]

I agree. Even though Monty disagrees, everyone is currently "investing" in an organization which has 35T in immediate debt with no signs of slowing down. That sounds very risky to me.

You disagree with TurboMonty? You dumb Earl Rube.

 

[lawgator1]

Hog, what's your point?

That government employees can participate in what is essentially a 401k? Ok, so can I.

That doesn't prove that privatizing SS means you can eliminate all risk.

 

[lawgator1]

Fun to discuss. Sad to see how many people lack vision with SS when those same people invest in retirement outside that system.

But like all we discuss, we can do nothing to change it and it is all simply a distraction from our day.

I agree SS needs to be dealt with. There is no appetite for cutting dollar-for-dollar benefits, so the only two options let would appear to be increasing SS taxes or again extending the retirement age. Hard to see a political willingness to push full retirement past 67, as is, much less for generations that have paid in when it was 65.

 

[McDad]

I agree SS needs to be dealt with. There is no appetite for cutting dollar-for-dollar benefits, so the only two options let would appear to be increasing SS taxes or again extending the retirement age. Hard to see a political willingness to push full retirement past 67, as is, much less for generations that have paid in when it was 65.

What no risk vehicles have you researched?

What is your minimum acceptable rate of return?

 

[McDad]

Hog, what's your point?

That government employees can participate in what is essentially a 401k? Ok, so can I.

That doesn't prove that privatizing SS means you can eliminate all risk.

is that investment too risky for your taste?

is the rate of return sufficient?

 

[lawgator1]

is that investment too risky for your taste?

is the rate of return sufficient?

The difference is its not mandated.

You are having the federal government order people to invest in certain platforms, but you aren't guaranteeing their return.

My 401k does not guarantee a particular return, but I do it voluntarily.

 

[CobbVol]

Cobb, what do you say about the R after R who had an opportunity to put forth legislation and did not?

Bush 2 at least gave it an effort. No body else has.

I think the GOP have learned the hard way that they do not have good faith partners in the D's and the media to fix it. Unfortunately, I think the SS system has to fail even worse beyond the current situation to even get the discussion started.

 

[Thunder Good-Oil]

I agree SS needs to be dealt with. There is no appetite for cutting dollar-for-dollar benefits, so the only two options let would appear to be increasing SS taxes or again extending the retirement age. Hard to see a political willingness to push full retirement past 67, as is, much less for generations that have paid in when it was 65.

The full retirement age of 67 is really just a variable in the benefits calculation. Moving it out to a higher number is just simply a reduction of benefits in the tables. SS can be drawn at age 62 for everybody and increases every month that enrollment is delayed until age 70. BTW, everybody should sign up no later than age 70 - there is nothing gained by waiting beyond age 70 and participants delaying past age 70 are in effect making donations to the government.

Before age 67 the benefit is reduced by 6% per year and increased by 8% per year if waiting until after age 67. So the savings to the program by raising the age from 67 to say age 68 saves the government 2% per year (8% minus 6%).

Another way that the full benefits age of 67 factors in is that those that are still working will have there benefits reduced when earning wages over a certain amount (around $20k).

Age 67 applies to those born in 1960 or later. Those born earlier than 1960 have that 67 reduced by 2 months per year.

 

[hog88]

Hog, what's your point?

That government employees can participate in what is essentially a 401k? Ok, so can I.

That doesn't prove that privatizing SS means you can eliminate all risk.

SS is a risk, it's impossible to remove all risk and brushing aside something that would be beneficial to the vast majority of Americans simply because there is a slight risk is crazy.

 

[Thunder Good-Oil]

For investment returns to be guaranteed, that would resemble annuities that life insurance companies sell.

 

[McDad]

The difference is its not mandated.

You are having the federal government order people to invest in certain platforms, but you aren't guaranteeing their return.

My 401k does not guarantee a particular return, but I do it voluntarily.

If you are willing to "risk" your money voluntarily in that instrument, are you not willing to "risk" money taxed compulsory in that same instrument?

 

[hog88]

I agree SS needs to be dealt with. There is no appetite for cutting dollar-for-dollar benefits, so the only two options let would appear to be increasing SS taxes or again extending the retirement age. Hard to see a political willingness to push full retirement past 67, as is, much less for generations that have paid in when it was 65.

Outside of privatizing SS everything else is just kicking the can down the road.

 

[McDad]

I think the GOP have learned the hard way that they do not have good faith partners in the D's and the media to fix it. Unfortunately, I think the SS system has to fail even worse beyond the current situation to even get the discussion started.

I hold the Rs in the same contempt as Ds on the issue. But can appreciate we have differing opinions.

 

[hog88]

The difference is its not mandated.

You are having the federal government order people to invest in certain platforms, but you aren't guaranteeing their return.

My 401k does not guarantee a particular return, but I do it voluntarily.

SS isn't guaranteeing a rate of return, people actually lose money contributing to SS and I'd bet you will be one of them.

 

[McDad]

The difference is its not mandated.

You are having the federal government order people to invest in certain platforms, but you aren't guaranteeing their return.

My 401k does not guarantee a particular return, but I do it voluntarily.

And, again, you set two parameters that you have so far not defined....what is a vehicle with acceptable risk? and what is a sufficient rate of return?

 

[85SugarVol]

We can't do that, it would create transferable wealth and lessen dependence on the federal government.

Good point. Hadn’t thought of that.

 

[hog88]

Good point. Hadn’t thought of that.

The federal government can't afford an actual financially secure and prosperous middle class, how else would they scare people into compliance and voting for them.