Bush’s Social Security plan?

[WildCat]

The amount of economic and financial market ignorance among educated folks on this board is unbelievable. Either that, or your hatred of Bush has blinded you to common sense.

I've heard worries about "what if the stock market crashes just before retirement". Well, even if the stock market loses 50% of it's value (we're talking Great Depression here) and the bond market goes bust you'll still have more of a return than SS as currently constructed will give you, which is guaranteed to pay out far less than you paid in, unless you manage to live to 90 or so. If the Dems fix it their way (more witholdings, less benefits, older retirement age) the deal gets even worse.

Those of you bashing the Bush plan are seemingly willing to cut off your noses to spite your faces! What, really, do you think the purpose of SS is anyway? To preserve the legacy of FDR (as that ridiculous Dem photo-op yesterday seemed to imply)? Is this ponzi scheme worth preserving no matter how small the payouts become?

Go ahead folks! Please find a 30-year DJIA or S&P 500 index that would be a bad deal. Really, find one. Show how the guaranteed negative returns of SS as favored by the Dems will leave us better off.

My POV is that if the gov't is going to take 12% of my pay every week to ostensibly provide comfort to me in my old age, then they'd damn well better invest it in something that has a fighting chance of providing an actual return. Not the "we'll take X$ from you now and if you live to be 90 you'll get 1/2X$ in return".

Bottom line - I'm sick of hearing these shrill, short-sighted boneheaded Dems fighting w/ everything they've got to guarantee me a negative return on what is supposed to be a retirement plan. None of them, BTW, have to worry about SS. They already have private accounts! If they really believe SS is such a wonderful thing, let's see them tie their own retirement plans to the return on SS. They won't of course. Instead, they'll sacrafice the retirement of tens of millions of Americans to play their ego-fulfilling political sandbox games. Pure scum is what they are, IMHO.

If the Dems really want to play this game, they'll get a big shock in the mid-term elections. There's not enough foolish voters around to back them on this one.

 

[Ed]

My POV is that if the gov't is going to take 12% of my pay every week to ostensibly provide comfort to me in my old age, then they'd damn well better invest it in something that has a fighting chance of providing an actual return. Not the "we'll take X$ from you now and if you live to be 90 you'll get 1/2X$ in return".

Excuse me but you are wrong. It is not "1/2x" it is any percentage of x that will work. Further, they can fiddle with deductions if you happen to want to work during your retirement reducing your payment. They can also raise the age as they see fit.

I heard on a radio show yesterday that if SS were an approved retirement plan, they would need reserves of something like 30 trillion dollars. Ummmm....

I don't see any problem with transitioning the system compleately out from under the feds.

Prediction: listen for bleating about the silly Brit experience shortly.....

 

[WildCat]

Excuse me but you are wrong. It is not "1/2x" it is any percentage of x that will work. Further, they can fiddle with deductions if you happen to want to work during your retirement reducing your payment. They can also raise the age as they see fit.

Absolutely! But what is certain under the Dems plan (which is either do nothing or raise taxes) is it will be far, far less than X.

I heard on a radio show yesterday that if SS were an approved retirement plan, they would need reserves of something like 30 trillion dollars. Ummmm....

Doesn't Al Gore have it in a "lock box" somewhere?

I don't see any problem with transitioning the system compleately out from under the feds.

Neither do I.

Prediction: listen for bleating about the silly Brit experience shortly.....

Of course! Whatever the hell that was, I'll bet it in no way, shape, or form resembled the 401(k) type plan Bush favors.

 

[Ed]

Originally posted by jay gw
[Center for Economic and Policy Research
Basic Facts on Social Security
and Proposed Benefit Cuts/Privatization

1) Social Security is Financially Sound

According to the Social Security trustees report, the standard basis for analyzing Social Security, the program can pay all benefits through the year 2042, with no changes whatsoever. Even after 2042 the program would always be able to pay retirees a higher benefit (in today's dollars) than what current retirees receive. The assessment of the non-partisan Congressional Budget Office is that Social Security is even stronger. It projects that Social Security can pay all benefits through the year 2052 with no changes whatsoever. By either measure, Social Security is more financially sound today than it has been throughout most of its 69-year history.

This begs the very real question of what happens when the surplus starts going down (1-2 years from now?). In essence the feds take this as a loan. When the dollars decrease they are going to look for money to pay for all of the crap that the idiots in Washington spend our money on. Who do you think they will strat looking toward? This shortfall will accelerate year by year and will max out when the surplus is exhausted (15 years?). At that point the SS system is not self funding AND the feds will have lost a cash cow. For the Dems this is not a problem. Tax, tax, tax.

2) President Bush's Social Security Cuts Would Be Large

The proposal that President Bush is using as the basis for his plan phases in cuts over time. A worker who is 45 today can expect to see a cut in guaranteed benefits of around 15 percent. A worker who is age 35 can expect to see a cut in the guaranteed benefit of approximately 25 percent. A 15 year old who is just entering the work force can expect a benefit cut of close to 40 percent. For a 15 year old, this cut would mean a loss of close to $160,000 in Social Security benefits over the course of their retirement.

Bush opened up the discussion, he presented no proposals so this is a partisan strawman. Shame. Even so, the comparison to the tax increases/benefit reductions necessary with a nanny government approach are artfully not presented.


Private accounts will allow workers to earn back only a small fraction of this amount. For example, a 15 year-old can expect to make back approximately $50,000 from the $160,000 cut with the earnings on a private account. If this worker retires when the market is in a slump, then it could make their loss even bigger.

Sound like BS. The presumption is that this poor, frightened, unable to cope without the GOVERNMENT 15 year old would be investing for 50 years. Damn, wish I had.

3) Imaginary Stock Returns Don't Offset Real Benefit Cuts

Proponents of private accounts have often used highly exaggerated assumptions on stock returns to argue for the benefits of private accounts. For example, even at the height of the stock bubble in 2000, when the price to earnings ratio in the market exceeded 30 to 1, many proponents of private accounts assumed that stocks would generate 7.0 percent real returns annually. This assumption was absurd on its face - it implied that price to earnings ratios would rise to levels of more than 100 to 1. Unfortunately, even the Social Security Administration has used these unfounded assumptions in assessing privatization plans.

Given current price to earnings ratios and the Social Security trustees' profit growth projections, real stock returns will average less than 5.0 percent annually. Some proponents of private accounts are still using exaggerated stock return assumptions to advance their case.

Look at the Dow over the last 30 years then call me. The problem that these proponents of government "help" face is that the market is a good investment over arbitraryly long periods of time.

4) Social Security is Extremely Efficient, Private Accounts Are Wasteful

On average, less than 0.6 cents of every dollar paid out in Social Security benefits goes to pay administrative costs. By comparison, systems with individual accounts, like the ones in England or Chile, waste 15 cents of every dollar paid out in benefits on administrative fees. President Bush's Social Security commission estimated that under their system of individual accounts 5 cents of every dollar would go to pay administrative costs.

The brit experience is irrelevant. Service costs are negotiable and controllable. and I do not believe the 0.6 cents/dollar figure. What do they mean "paid out"?

In addition, under Social Security workers automatically get an annuity (a life-long monthly payment) when they retire. By contrast, financial firms typically take 10 to 20 percent of workers' savings to provide an annuity when they reach retirement.

To be fair, they would have to let us know how much is left on the table when beneficiary dies. Under a privatization plan, the money invested is part of your estate. It does not go to pay for Kennedy's Jack Daniels.

8) The Bush Proposal Phases Out Social Security as We Know It

President Bush's proposal gradually shrinks the traditional guaranteed Social Security so that it will eventually become irrelevant for middle income workers. For today's twenty year old average wage earners, the guaranteed benefit will be equal to just 15 percent of their annual earnings when they reach retirement age. The guaranteed benefit will be equal to just 7 percent of annual earnings for a child born ten years from now.

As the traditional Social Security benefit becomes less important for middle-income workers, Social Security will increasingly become a poor people's program. This may be a clever strategy if the purpose is to undermine political support for Social Security; it is not a good way to structure the program if we expect it to be there for our children and grandchildren.

This souds good to me. They are moaning about the demise of a government buerocracy and expect sympathy. F'em

http://www.cepr.net/publications/fa...al_security.htm

So basically this data shows that private accounts won't be a savior to Social Security, and that if you agree to take them, your benefits will but cut....by alot.

No, it does not. It is an essentially dishonest representation by the scummy government drones who should probably be hung from lampposts anyway.

One of the big problems is that the Democrats, Independents or even Ralph Nader have no plan. They just insist that SS is not going to have any problems. So there's no real debate because there's nothing to compare Bush's plan to. The Democrats are pretty much guaranteeing Bush's plan will become law, so they don't really oppose it as far as I can tell.

These people are all on drugs.[/QUOTE]

 

[Random]

If George W. Bush can present an improved, coherent, effective, risk-free Social Security program and present it to the American people, then I will support it. The problem is that getting any sort of coherent idea about what Bush is proposing is like pulling teeth, and the few parts of it that people seem to agree on I don't really like. That's kind of the reason I started this thread. All the Republican sites are saying that it will usher in a new Golden Age where everyone will be swimming in money like Scrooge McDuck in his money bin, while all the Democratic sites are telling me to get used to cat food.

But maybe it is possible. Nixon went to China, maybe the GOP can fix Social Security. But after turning the first "surplus" we had in decades into record breaking deficits in less than a year, they got a pretty steep hill to climb when it comes to convincing me. This "Blizzard of Talking Points" insn't a good start.

(And spare me the Osama/Recession/Deficit tirade, the bulk of the deficit comes from the Bush tax cuts and every honest economist knows it)

 

[Silicon]

Sorry, I can invest my money better than the government can.

This is just a huge payday to wall street, and America floats 2 trillion for the transition costs.

The stock market scheme will do nothing to solve the fiscal problems of SS. Bush's plan STILL cuts benefits, but allows you to play the lottery and maybe you'll get lucky. But then from your "winnings" are deducted the rate that T-bills would be paying, and if you still have money left over, you STILL can't keep it, but you get an annuity payment from it that has no survivor benefits.



I actually prefer the Democratic proposal of an add-on account, kind of a 401k that is tied to your social security number rather than employment.

Then I also prefer an opt-in later retirement option that gives opters a tax benefit to retire later, it's a self-selecting means test.

Lots of ideas out there. Too bad the right is dominated by ideologues like WildCat who scream "ponzi scheme" over and over, when they know it's false to call it that.

 

[WildCat]

If George W. Bush can present an improved, coherent, effective, risk-free Social Security program and present it to the American people, then I will support it. The problem is that getting any sort of coherent idea about what Bush is proposing is like pulling teeth, and the few parts of it that people seem to agree on I don't really like. That's kind of the reason I started this thread. All the Republican sites are saying that it will usher in a new Golden Age where everyone will be swimming in money like Scrooge McDuck in his money bin, while all the Democratic sites are telling me to get used to cat food.

Risk-free? There's no such animal (and that includes the current plan). Risk is an inherent part of life. You might as well ask for the earth to stop spinning.

Why do you demand so much (guaranteed, risk-free positive returns) from the Bush plan and so little (guaranteed negative and paltry SS payments) from the Dems? Is it as about politics for you? Is that all that matters?

 

[Silicon]

This begs the very real question of what happens when the surplus starts going down (1-2 years from now?). In essence the feds take this as a loan. When the dollars decrease they are going to look for money to pay for all of the crap that the idiots in Washington spend our money on. Who do you think they will strat looking toward? This shortfall will accelerate year by year and will max out when the surplus is exhausted (15 years?). At that point the SS system is not self funding AND the feds will have lost a cash cow. For the Dems this is not a problem. Tax, tax, tax.
/B]

And the Republicans' solution: Borrow Borrow Borrow.

The Republicans want to float 2 Trillion just to get this ball rolling, and it STILL does NOTHING to address the shortfall to the payroll taxes and how the surplus funds the general budget. NOTHING in the Bush plan addresses the problem you quote here.

Nothing.

 

[WildCat]

Sorry, I can invest my money better than the government can.

Then why the hell are you for the Dems plan and against Bush's?! You get to choose your plan!

This is just a huge payday to wall street, and America floats 2 trillion for the transition costs.

Personally, I don't give a damn if Wall Street gets a few benefits, it's still a much better deal for me.

The stock market scheme will do nothing to solve the fiscal problems of SS. Bush's plan STILL cuts benefits, but allows you to play the lottery and maybe you'll get lucky. But then from your "winnings" are deducted the rate that T-bills would be paying, and if you still have money left over, you STILL can't keep it, but you get an annuity payment from it that has no survivor benefits.

Investing in the stock market is not gambling! There's a huge fundamental difference: With gambling, there must be a loser for every winner. Not so in the stock market.

I actually prefer the Democratic proposal of an add-on account, kind of a 401k that is tied to your social security number rather than employment.

Then I also prefer an opt-in later retirement option that gives opters a tax benefit to retire later, it's a self-selecting means test.

Please link to this Dem plan, it's new to me.

Lots of ideas out there. Too bad the right is dominated by ideologues like WildCat who scream "ponzi scheme" over and over, when they know it's false to call it that.

It's a ponzi scheme by any stretch of the imagination! Only it can't die a natural death like other ponzi schemes because the entire population is forced to participate. Instead, the returns just keep getting smaller and smaller.

Yeah, I'm a right-wing ideologue. A pro-abortion, pro-gay marriage, atheist right-wing ideologue. Please don't try to label me. I will slam a political party at will, but I avoid using terms like liberal, conservative, left-wing or right-wing. They're highly subjective terms to the extent that they're meaningless.

 

[webfusion]

No Congressional Social Security

Are you aware that Congressmen and Senators do not even belong to the Social Security program? Thay have their own delicious and comfortable retirement plans.

I guarantee if the members in the US House of Representatives and the Senate depended upon the Social Security Administration for their pensions, this entire issue would be straightened-out in fourteen seconds flat. (i.e. -- dropped like a lead balloon)

 

[WildCat]

And the Republicans' solution: Borrow Borrow Borrow.

The Republicans want to float 2 Trillion just to get this ball rolling, and it STILL does NOTHING to address the shortfall to the payroll taxes and how the surplus funds the general budget. NOTHING in the Bush plan addresses the problem you quote here.

Nothing.

If that's what it costs to put that relic in the grave, so be it. Money well spent, far less than what it will cost later.

 

[WildCat]

Re: No Congressional Social Security

Are you aware that Congressmen and Senators do not even belong to the Social Security program? Thay have their own delicious and comfortable retirement plans.

I guarantee if the members in the US House of Representatives and the Senate depended upon the Social Security Administration for their pensions, this entire issue would be straightened-out in fourteen seconds flat. (i.e. -- dropped like a lead balloon)

You fool! They're the elite intelligentsia, they can handle their own affairs. You're part of the unwashed masses that needs the brilliant minds of the Dem Congressional delagation to keep you from blowing your retirement funds on Florida swamp land deals, booze, and drugs. Now just shut your mouth and do as they say, not as they do.

 

[DarkMagician]

Bush Social Security Plan:

Wait for something to happen to SS, and then react accordingly.

 

[Silicon]

Then why the hell are you for the Dems plan and against Bush's?! You get to choose your plan!

HA HA! You BELIEVE THAT? That's not the Bush proposal.
You'll choose from a small menu of mutual funds that are Government chosen. Blech.

Personally, I don't give a damn if Wall Street gets a few benefits, it's still a much better deal for me.

Nope. Not even marginally a better deal. They're cutting your benefits and forcing you to play the lottery to maybe get some back, but then they're tying your hands behind your back by not letting you choose where to invest, and then you can't pass those earnings on to your dependents. Double-blech.

Investing in the stock market is not gambling! There's a huge fundamental difference: With gambling, there must be a loser for every winner. Not so in the stock market.

In the stock market, losing = doing worse than the market at large. When most of the people in America are investing in the same mutual fund you are, YOU lose, because you won't exeed average return. You are the DEFINITION of average return, so you are on a treadmill that doesn't allow you to gain wealth. Sure, the same tide lifts us all, but If the economy grows, so do payroll revenues, so SS is solvent!

Please link to this Dem plan, it's new to me.

http://www.robertreich.org/reich/20050112.asp

http://www.centrists.org/pages/2004/09/8_guest_wealth.html

It's a ponzi scheme by any stretch of the imagination! Only it can't die a natural death like other ponzi schemes because the entire population is forced to participate. Instead, the returns just keep getting smaller and smaller.

Pay as you go is not the same as Ponzi. It's a mathematical different formula. It's also not only based on the size of the working population. Economic growth makes for higher wages, and therefore more money coming into the scheme. It requires only a stable and growing economy, not an exponentially rising supply of suckers.

If you don't understand the difference learn about it here:

http://www.ssa.gov/history/ponzi.html

 

[Random]

Risk-free? There's no such animal (and that includes the current plan). Risk is an inherent part of life. You might as well ask for the earth to stop spinning.

Why do you demand so much (guaranteed, risk-free positive returns) from the Bush plan and so little (guaranteed negative and paltry SS payments) from the Dems? Is it as about politics for you? Is that all that matters?

I would love to have Social Security be fixed. I am well aware of the problems that it faces, and steps need to be taken to correct them.

That being said, I find a lot of people have completely misunderstood the (get ready) philosophy of Social Security. It is not a retirement program. It is not an investment scheme. It is not the government borrowing your money and paying it back with interest.

The whole point of Social Security is that it is supposed to be Insurance. It is a safety net for those who cannot work (and if you live long enough, you will become one whether you like it or not). The government takes your money while you can work, and gives it to people who can't. When you retire, you are not getting your money back. You are getting money from other people so if some sort of horrible financial disaster befalls you, you are not left out in the street to die.

It is not there to help you make money, it is there in case all else fails. If you cannot grasp this, then Social Security will always seem like a horrible deal to you. It will not make you rich (because it's not supposed to), it takes money out of your pocket that you might have invested for a better rate of return (it's a tax, get over it), and money that you earn will be going to people who are not you (there are a lot of them apparently).

It's a safety net, the last barrier before the trapeze artist hits the ground with a sickening thud. Bush wants to sell the net and buy us better trapeze bars and some high quality gripping gloves. It misses the point.

Look, you people don't have to respond to this, but just ask yourself what you would do if you invested your money in the stock market and lost it all. Really ask yourself the question. Don't go into how unlikely it is, don't retreat into talk about average returns and dividends, don't say "well at some point I'd switch to bonds", and don't chicken out and say "them's the breaks" or "that wouldn't happen". Seriously ask yourself what you would do if you hit retirement age and found you had nothing.

 

[Elind]

The whole point of Social Security is that it is supposed to be Insurance. It is a safety net for those who cannot work (and if you live long enough, you will become one whether you like it or not). The government takes your money while you can work, and gives it to people who can't. When you retire, you are not getting your money back. You are getting money from other people so if some sort of horrible financial disaster befalls you, you are not left out in the street to die.

It is not there to help you make money, it is there in case all else fails. If you cannot grasp this, then Social Security will always seem like a horrible deal to you. It will not make you rich (because it's not supposed to), it takes money out of your pocket that you might have invested for a better rate of return (it's a tax, get over it), and money that you earn will be going to people who are not you (there are a lot of them apparently).

It's a safety net, the last barrier before the trapeze artist hits the ground with a sickening thud. Bush wants to sell the net and buy us better trapeze bars and some high quality gripping gloves. It misses the point.

Look, you people don't have to respond to this, but just ask yourself what you would do if you invested your money in the stock market and lost it all. Really ask yourself the question. Don't go into how unlikely it is, don't retreat into talk about average returns and dividends, don't say "well at some point I'd switch to bonds", and don't chicken out and say "them's the breaks" or "that wouldn't happen". Seriously ask yourself what you would do if you hit retirement age and found you had nothing.

Thank you. I agree. The rest is smoke and mirrors. I don't disagree that there could be better ways to make those "insurance premiums" appreciate better than the current system(s), but to think that this is some magic formula that the "free enterprise personal ownership religion" is going to overcome all problems is like saying creationism has all the answers.

 

[WildCat]

Nope. Not even marginally a better deal. They're cutting your benefits and forcing you to play the lottery to maybe get some back, but then they're tying your hands behind your back by not letting you choose where to invest, and then you can't pass those earnings on to your dependents. Double-blech.

Yes, you can. They can inherit your account. You own it!

In the stock market, losing = doing worse than the market at large. When most of the people in America are investing in the same mutual fund you are, YOU lose, because you won't exeed average return. You are the DEFINITION of average return, so you are on a treadmill that doesn't allow you to gain wealth. Sure, the same tide lifts us all, but If the economy grows, so do payroll revenues, so SS is solvent!

This is just ridiculous! By that definition, I "won" at Blackjack in Reno last year. OK, I lost 5% of what I started with, but most people lost more so I won!

http://www.robertreich.org/reich/20050112.asp

http://www.centrists.org/pages/2004/09/8_guest_wealth.html

Those are not Democratic Party sites. Please show the Dem proposals. You know, by Dems who are actually in the Senate or House.

Pay as you go is not the same as Ponzi. It's a mathematical different formula. It's also not only based on the size of the working population. Economic growth makes for higher wages, and therefore more money coming into the scheme. It requires only a stable and growing economy, not an exponentially rising supply of suckers.

If you don't understand the difference learn about it here:

http://www.ssa.gov/history/ponzi.html

well, if the bureaucratic double-speak says it's not a ponzi scheme it must be so! Then there's no problem w/ SS, I can expect the same rate of return that previous recipients earned, right?

Real dollar returns are getting less over time, and the Dems have nothing to address that. They promise only less and less return on my dollar. Negative returns, actually. Not my idea of "security", thank you.

 

[jay gw]

Outside of government bonds, one of the safest investments is an index fund. An index fund tracks the market as a whole, and returns exactly what the market returns - the averaged of the S&P 500, Wilshire 5000 etc. is what the fund returns.

Did you know that:

From 1900 to 1943, the Dow Jones Industrial Average only increased at a rate of return of 2.3% per year.

Another stagnant and long duration was from about 1962 to 1982 (20 years), when the DJIA only increased at a rate of 2.4% per year.

http://www.stockmarkettiming.com/historical-charts.html

Here's what really happens when someone manages a giant fund that pools investors together:

Though countless millions of dollars of shareholders' money is spent annually by mutual funds promoting themselves and the notion that they have "expert" stock pickers, the sad truth (or the funny truth, if you're in a laughing mood) is that the vast majority of mutual funds underperform the returns of the stock market (as represented by the S&P 500 index). Because of their excessive annual fees and poor execution, approximately 80% of mutual funds underperform the stock market's returns in a typical year.

The average actively managed stock mutual fund returns approximately 2% less per year to its shareholders than the stock market returns in general.

During the 1990s, the S&P 500 has provided an annualized return of 17.3%, compared with just 13.9% for the average diversified mutual fund.

The costs of being in the average actively managed mutual fund over time are, put simply, very, very severe.

Although 2% may not sound like that much of a differential when the market is returning roughly 20% per year as it has from 1995 through 1998, the standard returns for the stock market historically are closer to 10%. Consider whether this is severe enough for you: over 50 years, a $10,000 investment will compound to $1,170,000 at 10% returns per year, but to only $470,000 at 8% per year.

http://www.fool.com/school/mutualfunds/performance/record.htm

So pooling a bunch of people's money together in private accounts and managing them is not the panacea to Social Security problems. The government managers will underperform the stock market, and will charge so many fees that it will push any profits down.

 

[Elind]

So pooling a bunch of people's money together in private accounts and managing them is not the panacea to Social Security problems. The government managers will underperform the stock market, and will charge so many fees that it will push any profits down.

OK. I take your numbers at face value (I haven't verified any), but they sound rational.

We can debate the fees issue, which can theoretically be controlled if the primary management "bid" cost on return is fees;

but the real question is that if this matter can be reduced to relatively simple fundamentals, as you describe, and since whatever we think of people in government, they are not all fools and probably do a fair amount of their own investments, then what is the REAL driving force behind this issue?? (conspiratorial cynics need not respond)

 

[Bjorn]

For what it’s worth, I worked with (private) pension plans for 20 years and want to say something about the SS:

If we delete the details (and concentrate on the old-age pension) here’s how it has worked and still works:

We have been paying in for 70 years, a bit more each year than what we have been paying out to the retirees. Money has accumulated (it has been borrowed by the government in the meantime, but that doesn’t change the fact that there is a surplus each year). We have a FUND.

We are still paying more in every year than we pay out, but since baby-boomers are growing old and the working population is growing slowly in comparison, the prognosis is that money in and money out will be even in about 15 years (give or take a few, it doesn’t matter). I accept this as a fact – as it is in most ‘modern’ countries.

From about 2020 and onwards we are paying less into the fund than we spend, and we have to eat into the FUND. In about 45 years from now the FUND is empty (if we accept the calculations about growth in economy, length of life after retirement and so on). I accept this – maybe not as a fact, but at least as a prudent prognosis that should tell us to do something about it – just in case. Let's hope the growth rate in the economy will be higher than the prognosis, but don't count on it.

From 2050 onwards, payout will be about 70% of what we are being ‘promised’ (give or take a few, it doesn’t matter).

Without privatizing, more money has to be found or made:

First, the obvious priority would be to look at the profits from the ‘investment’ that is available to us through the FUND. Make more money from our investment, in short.

I agree 100% with WildCat that investments in the stock market have done better than the interest rate in any given 10 year time frame (nothing much to discuss, statistics are there for those who can read) - however, with the restrictions mentioned or proposed for what the FUND (private or run by the government) can invest in, it might not be so obvious that such a thing will happen to the retirement funds.

Second, we could pay more money into the system. Higher taxes, bluntly spoken.

Third, we could pay less to each retiree.

And that’s it. No free lunch to be found this time either.

Privatization, personal accounts and less money paid into SS will, of course, be exactly that – less money into the SS. We, or the FUND (or make it the government) will run out of money a lot earlier, and money has to be borrowed in a few years to enable continued benefits to the retirees – because those retirees won’t have the private account we envision future generations will have. We are talking trillions.

As far as I can see, we, the taxpayers, will pay that bill (the loans) sooner or later. Of course we will, we are paying for the retirement one way or another anyhow, there are no free lunches whichever way we do it.

The greatness about personal accounts rests, as far as I can see, on the thought that personal accounts will yield a higher return than what we get now (‘you can make a better investment on your own’, to quote the president). Well, that depends on two factors: How is the government handling our money and what interest do we get from it – and what interest could we get if we could invest on our own, given the restrictions mentioned above.

I haven’t been convinced that we would be allowed to do anything with the funds that the government couldn’t do for us, if it wanted to, with the money we have saved in Washington. Nor have I been convinced that some suckers won’t lose their investment, but it’s a free country.

So much for the math. My doubts are not there, but on thoughts about what happens if people are left to invest – or not invest – on their own. I think poor people are lousy investors, I think they would procrastinate out of need or stupidity, and I think they are more likely to be fooled by the get-rich-fast investment offers. And again, in a free country …..

If procrastination/losses can't happen because we have little choice as to investing or not, or on what to invest in, I’m back to square one: Why do it on our own if the rules are so strict that the government could just transfer the money to the approved mutual funds anyhow?