April 12, 2005
WELL, OF COURSE I LIKE MY ACCOUNT...:
The Social Security Crisis Gets Personal (Stuart Butler, April 12, 2005, LA Times)
The debate over Social Security reform so far has centered on the concern that, as the number of retirees balloons, the program won't be able to pay its promised benefits. That certainly is a crisis that must be addressed. [...]But the personal crisis in Social Security is even more worrisome — and it's deeply unfair.
As the Social Security system itself has aged, payroll taxes have grown relentlessly and the return on those taxes has fallen dramatically. When Social Security began, the payroll tax was just 2% of income. Now it's 12.4%. Today, the average male worker about to retire will typically get just a 1.27% return on his lifetime of taxes — less than he'd get from a savings account. That's bad enough, but the younger you are, the worse it will get. A 25-year-old worker can expect a return of minus-0.64% — he loses money.
Some retirement "security" program.
Everyone on the Left says private accounts won't work, but none of them propose turning their 401k's over to the feds to get a higher rate of return. Posted by Orrin Judd at April 12, 2005 9:15 AM
Touché!
Why can't Bush's people write him lines like that? Instead we watch TV ads of bulldozers pulling down houses to "fix" a leaky faucet just like Bush wants to "fix" the problems in social security by pulling it all down around our heads.
Posted by: erp at April 12, 2005 1:17 PMHello Orrin... long time..
I think the authors of that short little piece might be nearing some actual truth.... With an ageing population, a bureaucratic mess in DC (in which I am swimming) and no clear understanding of the issue anywhere in america - perhaps we do need an overhaul. Not that I would go anywhere near wall street with my supposedly federally insured money. Let's see, gas prices rising with no foreseeable reversal, the dollar falling to the Euro, and the greatest swings in personal fortunes on a yearly basis in recorded history and W wants to put my money where? It's not too likely that would work out for the best. Perhaps someone should look into cutting defense spending.... - AK
Aaron:
Yearly? If you're thinking that short term you've lost already.
Posted by: oj at April 12, 2005 2:30 PMAaron: Please understand dimensions of risk and return before you throw the baby out. My (Very Aggressive) 401k portfolios holds 9 funds containing over 9,700 individual equity issues from dozens of countries (yes, even those amazing lands where the Euro is supposedly trumping the dollar) for a blended total of 47 basis points (0.47%) to run it. I could only DREAM my Social Security dollars could be invested as effectively.
Posted by: John Resnick at April 12, 2005 7:18 PMAaron - Let's See -
50 million people have 401Ks so I'd say a good chunk of the public would understand personal retirement accounts.
Your money is only federally insured if is under 100K and sitting in a bank, currently earning barely 2%. But even that is preferable to the current SS system where you have to live to 80 to get a positive rate of return and your payments aren't guaranteed.
Oil prices go up, they go down. They have fallen for the past several and many expect them to be back in the low 40s before long.
Dollar falling to the Euro - the dollar will fall against any currency that is being artificially propped up by its central govt by keeping rates too high.
If Wall Street is too much for you stick it into a short term bond fund or money market fund - the issue is that it will be your choice, not the govt's.
Cut defense spending? Ah yes, the #1 cure for everything that befalls society according to the anti-defense crowd.
Posted by: AWW at April 12, 2005 8:08 PM...Let's see, gas prices rising with no foreseeable reversal...
Now that Aaron has made this statement (along with a few other august individuals), there will now most certainly be a reversal in oil prices, and probably by Sep. 30.
Just remember what the "experts" said about NASDAQ around, oh, Feb 2000:)
Posted by: Brad S at April 12, 2005 9:16 PMIt's down six bucks this week.
Posted by: oj at April 12, 2005 9:21 PMWell, I certainly got everyone's ire up, didn't I? You are arguing on two fronts here, 1) that we don't have enough money to sustain Social Security and 2) that more money could be made by investing it in the market.
Federal allocations limit money to some programs while giving it to others (in theory) - and I understand that you boys would like to see the government reduced to a lemonade-pot-and-guns shack run by two part time volunteers (it's the NH way) - but come on, defense spending is an easy target and one the military is even beginning to question due to the implied cost in maintaining upgrade and educational elements(check out SSI documents on that one if you like). Certainly putting the retirement fund in everyone's hands (like your 401k) would make some people money. It would probably be good for the market - for awhile, but that's as much conjecture as guaranteeing returns. The intent of social security is not to prop up those who are capable of saving for themselves, or propping up the market, but as a buffer for those who are not capable, willing or able to invest their money wisely. If you want to get rid of social security - just say so. But I suppose that message doesn't sell, does it?
And finally, why do I respond to these things again? Talk about intractable conflict.
Posted by: Aaronk at April 13, 2005 12:13 PMAaron;
We have plenty of money to sustain SS as is. It's just a bad way to fund a retirement program and serves no good social end when we take taxes and dole them out later.
Accounts get higher returns and give people ownership.