Are the American people receiving a better retirement through social security than they could through a personal savings account?
Hmmm...I think the aspect this question is really directed at (the recipients) is the wrong aspect to answer the question from. Rather, the question should be asked from the perspective of those paying in. In this regard, the answer can not be anything but a resounding, deafening, NO! Why? Because the government is currently using the SS program as a means of stealing trillions of dollars (yes, with a 'T') from the American people. It does this through the myth of the SS Trust Fund..for which it has been collecting money for decades, but for which is has yet to contribute a single dime into. Rather, this money has simply been spent on other things. Further, they are shortly going to have the unmitigated gall of attempting to collect this same money, which we, the American people have already paid in, from us again!!!! Private acccounts would prevent this type of financial trickery, because the money would actually have to go into these accounts, removing the governments ability to spend it for us beforehand. Is it riskier to have social security in the government's hands or in the hand's of the individual?
See above...and then tell me if this question really needs to be asked. Clearly, it is the ultimate risk to allow the government access to this money..if they have it, they will spend it. NOTHING could be riskier than that. Further, the additional taxes they are going to inflict on us to make up for the money they've already spent will further detract from the American people's ability to save for themselves, simply worsening the cycle. The only solution is to do anything possible to take the money out of the governments hands, as they have never, in their entire history, demonstrated the ability to save it on your behalf.
As for the original intent of this question (ie, are private accounts better than the current system in terms of expected return)..again, this is pretty simple. How many financial advisors tell their young clients to put most of their money into fixed return investments? None. Why? Because, over time, investing in the market is ALWAYS the better alternative. Yes, it does have risk...and you are rewarded for taking that risk with higher average returns. Everyone knows this...but those opposed to the private accounts flog this horse to scare people away. Either these people are lying or financially uneducated...in neither case should they be paid much attention to. It would be very worthwhile to ask all the critics of such a system where their personal retirement funds are allocated...I expect you would find that the vast majority of them had been invested in the very type of funds they are railing against, unless they are of the age at which capital preservation should start to overrule wealth creation. Which should be all the information anyone would need to know to judge their credibility on the issue.
Amlord, Isn't their a bigger risk investing your money in the stock market?
if the market crashes (very possible scenario considering how much money the gvoernment spends today and the growing deficit), how will people recover?
Over time. As they always have. Also, you must consider what would happen to SS in that scenario....interest rates would surely rise, causing financing the federal deficit to become unmanageable, leading inevitably to drastic cuts in government programs such as SS.
Obviously one could make better investments with the same money if they were qualified to do so. The problem is most people aren’t qualified nor have the will to create such a discipline in their lives.
This is the classic argument against, which has two flaws. First, it ignore the fact that the government is currently fleecing you by spending money it is supposed to be saving, with the intent of taxing you for it again. Burying it in the ground would be a far better alternative to that. Second, this is classic liberal 'the common man is incompetent' bullhickey. If someone doesn't have the will to learn about the single biggest financial decision in their life (yes, bigger than your house)...then I have better things to do with MY money than support their ignorance. A short, 20-30 minute discussion with a financial advisor would be more than sufficient to answer this question...if you're not sure, you put your money into an account which mirrors the S&P 500, and you leave it there until you near retirement age. There, that wasn't so hard, was it? Anyone who doesn't have the will to learn that shouldn't have direct access to MY wallet. Plus, look at this from the other perspective...imagine how much better off we would be if everyone did become more financially aware of things like this? We would be a much more productive country, with all the benefits that would entail.
Why even take the risk?
The stock market is too up and down to take a chance of losing your retirement.
See, that's the myth. The reality is that you've already lost it...the government has been busying spending it as soon as they took it from you. So, THERE IS NO MONEY FOR YOUR RETIREMENT! We have only the hope that they'll get the money from somewhere (which they will, by raising taxes). So, you'll end up contributing to your retirement twice...once when they stole it from you, and once again when they had to replace what they stole. Exactly how do you figure that's the better system?
Where will we get the money to pay the benefits of those on the system if we take money out of it?
Good question...the answer is that the private accounts will be funded with the money that was supposed to be going into the Social Security Surplus. Basically, all it is doing is forcing the government to be doing with that money what it was supposed to be doing all along....saving it for your retirement. Currently, its just gone. So, your return on this investment over the current plan is infinite (something/zero). Don't know about you, but I'll take something over nothing anytime.
Estimates by the Social Security trustees (using rather pessimistic assumptions) and the nonpartisan Congressional Budget Office (CBO) indicate that the trust fund is solvent for another 38 to 48 years if we do nothing. In other words, Social Security is not going broke anytime soon.
Not true. This calculation is counting the governmental IOU's for what they've been spending out of the Trust Fund as 'real' money. It's not...taxes will have to be raised to meet those obligations (or spending drastically decreased, and we all know what the chances of that are).
Despite the fact that the Social Security trust fund is as robust today as it has been in recent years
True...there wasn't a dime in it before, and there's not a dime in it now. Which makes you understand why the author didn't provide the exact figures in the statement, doesn't it?
Not only would privatization expose workers to risks they are poorly equipped to handle, it would subject their children to debts they should not be asked to bear.
You mean, like the current system of spending the money that's supposed to going into the trust fund, with the intent of raising taxes later to cover the deficit? I guess the difference being at least this time we'd be asked....
I might be wrong, but I thought that the idea behind something like Social Security was to take away the risks associated with the vagaries of the market.
...and compare that to the risk of giving the government your money to keep for you (wink, wink)? Hardly the better alternative, I think.PS...I apologize in advance for my cynicism and any sarcasm....this is just an issue that absolutely gets my blood boiling! The government has been stealing Trillions of dollars from us...and we're allowing it, and they're going to do it to us again! ARGHHHHH!!!!! Please keep this in mind if I have unintentionally offended anyone.