You could ask the same question to people before Black Tuesday 1929 and they would have agreed with OJ.

Chris:

On that Wednesday would you have disagreed? If so it would be short-sighted.

Donald Luskin nails Paul Krugman's hide to the wall again by refuting the emminent economist and New York Times columnist by citing that emminent economist and then-New York Times contributing opinion writer Paul Krugman who made the exact opposite argument in a 1996 Times op-ed piece.

The only difference, of course, is who is in control in the White House. Paul's next column will probably call for a three year statute of limitations law on Google searches...

At what age am I when you ask that question? Makes a big difference in the answer.

Whatever the age of the "contributor" to SSI, the system still stinks. The federal government is not structured to responsibly manage anything but defense, interstate commerce and internal improvements to infrastructure. When they touch anything else it is almost invariably harmful. If the truly fraudulent nature of the social security system and its history were understood by the American people there would be hell to pay, assuming of course that we have not become a nation of geldings. The love affair with the state and the collective participated in by guys like Krugman is beyond my understanding. The central authorities could bamboozle the people to an unlimited degree and Krugman wouldn't care as long as he or his buddies are the bamboozelers.

Harry:

Not to a privatized system, because you'd be forced into lower riskj investments as you age.

You would think a prominent economist would recognize a Ponzi scheme when he sees one. It really chaps my a** every time I write a check that includes my contribution to this system. Please stop insulting my intelligence. I am never going to see most of that money again about 15 years from now. Those statements the government sends out are the greatest pieces of fiction since Ulysses - or the Chicago subway schedules.

Michael Tanner over at The Cato Institute has a more reasoned and researched answer than Mr. Krugman's predictable knee-jerk blather.

Harry, even if at certain age thresholds, set percentages of the internal holdings of an account were required to be in US Govt. instruments (such as TIPS or I-bonds which are inflation protected), you'd come out money ahead.

Attempting to repost that previous link so it works(sorry):

Rick T.;

Or how to make a Ponzi scheme work. This can be done by somehow getting rid of most of the people who can collect. FDR did this by setting the retirement age above the average life expectancy, so most of the payees are dead before they collect. If we raised the retirement age to 75, Social Security would be solvent (although still a very poor investment).

The real question, oj, is: Would you rather have your 401k account, or give the money to Congress to spend, getting nothing in return but a promise that some future Congress will appropriate a pension for you?

pj:

They'll definitely give us the money--that's the problem.

AOG:

The originators of the concept had the age equation figured out in 1889. But here in the US, dead folks (for the most part) don't vote. So you gotta pay 'em while they're alive to stay in office.

OJ, on Wednesday I'd have no money.

And because the banks lost their money in the stock market, I'd have none of the money I put in the bank.

And depending on my age and the job market, I'd might not have a job either.

And that's when I need Social Security.

It wasn't meant to be a retirement account, but a means to make sure the elderly and infirm could eat and sleep under a roof. It slowly became that because that was people's expectations.

Any reform needs to switch the retirement-planning portion into a new system while still preserving what Social Security was meant to protect.

However, if you're setting up a privatized retirement system, you better educate the people so they know how it works and most don't. There's going to be hell to pay after the baby boomers retire and start taking their 401(k) money out of the stock market and the stock prices start going down.

Chris:

But when you retired, in 1960, you'd have been wealthy.

Regarding 401(k)s, IRAs, SEPs, etc.: They're all tax-free or tax-deferred by leave of Congress, and Congress can change the rules.

Given that the US government is heading into a decades-long revenue crunch, what makes any of you so sure that the tax-beneficial aspects of the aforementioned retirement accounts will stay intact ?

My guess is that they WON'T.

Politicians like being re-elected.

Unless it went into a lucky lottery ticket, my investments at the age of, say, 25, wouldn't have bought me lunch at McDonald's.

SSI is insurance not an investment. As a non-investment, it's a pretty good investment.

Investment, as insurance, makes lousy insurance.

I have lots of problems about SSI, but this whole discussion -- Chris excepted -- is a comedy of category errors.

Harry:

You're right, SS is not an investment. Investments are expected to have some possibility of returning a profit.

As insurance, SS is VASTLY overpriced.
Sure, it's a good idea to have disability insurance. A good policy won't cost you 15.3% of your gross income.

The bulk of SS taxes go to making payments to retirees, not to the disabled, or for medical benefits.
Thus, that portion can easily be compared to any other retirement plan.

Harry:

Every economic model I've ever seen says you'd be a millionaire now if you'd invested in a simple index fund for the past forty years.

Maybe so, but I came real, real close to dying when I was 32. If I had, my family would not have inherited a million from my investments, even if I had put all my SSI contributions into the most lucrative market then available, which, as I recall, was run by Bernie Cornfeld.

They wouldn't have gotten a million from Social Security either. Do you have a point or just a boil on your butt today? You're usually wrong but at least sensible.

Death at 32 is what real insurance is for.

Harry-

SSI is NOT insurance. SSI utilizes transfer payments. There is nothing there except an off budget cost. More goes out than comes in.It is a pyramid scheme which has run out of money. If you or I set up such "insurance" to be sold to others we'd be put away for many, many years. Talk about mischaracterizations.

Face it, it is an economically unsound and irresponsible program which has been mis-characterized as "insurance" since day one. There are solutions but it must be dealt with and changed.

Chris- If federally insured banks close their doors to the detriment of the depositors, how the heck can you honestly believe that SSI payments would be worth anything? If the feds are unable to make the depositors whole, how would they meet SSI payments in anything other than worthless paper? I know Harry believes what you're saying, but think about it.

A million when you're 60 has no present value if you cannot feed yourself at age 25.

Let's dredge another example from the family files. My unlucky brother-in-law was diagnosed with MS at 23. Life insurance would have been of no benefit to his wife and daughter, because he did not die until he was 47. But he was unable to work by the time he was 25.

SSI rescued his family, and provided some (though not much) assistance to him in his long decline.

Or are you suggesting that his 5-year-old daughter could have gone to work?

As I understand Orrin's position, after SSI is wiped out, such rather uncommon cases would be taken care of ad hoc.

All I can say is, they weren't before SSI.

Harry:

You can't possibly be as unintelligent as you're making yourself sound. What is the present value of your Social Security retirement at 25? $0.

If you want to switch to the topic of disability coverage, that's fine.

But the family could have just moved in with you, no?

Well, let's see. An economist once told me that a family at minimum wage should be spending 25% of its income on life insurance. Add up disability etc., and there'd be precious little point to working at all.

I agree SSI is in a bad way, not least because all the money has been spent, sometimes more than once.

But you're attacking administration, you haven't shown me yet how your 401-ks etc. answer the goals of social insurance.

I've never yet met anyone in this sort of debate who does not offer, sooner or later, the claim that he's beating the heck out of the market on his personal investments.

We cannot all beat the averages.

Geez, you really are a mug. 25%? Are you sure that wasn't an insurance salesman who told you that?

If I recall the number correctly, if you'd owned an index fund for the last 70 years you'd have made 10% a year.

A person working full time at the minimum wage nets about $ 10,000/yr, after payroll taxes.

A twenty-five year old male, nonsmoker, can buy $ 150,000 of term life insurance for $ 150/yr, or less.

That's 1.5% of net income, to replace a decade and a half of income, should the worst occur.

The reason SS privatization makes such good sense is that nobody needs to beat any averages. Just making the S&P 500 average, over decades, DOUBLES the current benefits from SS.

Since it's a rare year when both stocks and bonds are down, by mandating a gradual move from stocks to bonds as the individual ages, growth can be achieved with no sacrifice of safety.
Further, the government can "skim" a premium from disbursments during up years, (which, historically, outnumber bad years, even during the Great Depression), and use that money to guarantee minimum payments during down years.

Also, only a portion of SS contributions would be available for investment in the market; Some fraction, probably a great majority, of contributions would stay in the present system.
Anyhow, I expect that people could choose to opt out, and let the government handle their accounts, exactly as is done now.

And, hey, privatized SS accounts hopefully will be inheritable, so if one dies young, all those retirement dollars don't go up in smoke, as they currently do.