Should Social Security Be Privatized?

[Buster Icon]

No, no, and hell no. The old argument that if you had invested young, you’d be fine at retirement is ridiculous. You're asking a teenager to make life-altering financial decisions? Even if they did, it’s still a gamble, and Social Security is not called “Social Maybe” for a reason. Sure, it’s not enough to live lavishly, but it keeps millions afloat, including this 74-year-old.

Ever notice how the loudest voices for privatizing Social Security are the same ones who want to gut every safety net? Let’s hand over what works to the same Wall Street geniuses who brought us Enron, the housing crash, and banks too big to fail. Because that worked out so well.

Social Security is a guarantee--your retirement isn’t at the mercy of some banker’s bad bets. Wall Street wants to “invest” it, which really means fees, commissions, and middlemen pocketing your money while your retirement fund vanishes. Enron proved what happens when the market “manages” retirement: pensions disappeared overnight. The 2008 crash showed how millions watched their 401(k)s evaporate while Wall Street got bailed out. Had Social Security been privatized, retirees would have been left destitute.

Conservatives love saying people should just save for retirement. Easy to say when you’re not living paycheck to paycheck, crushed by rent and medical bills. Republicans legislate based on fantasy--thrifty, responsible people investing wisely. Democrats legislate based on reality--people struggling to get by. Social Security exists because civilized societies don’t abandon their elderly.

And no, Social Security isn’t going bankrupt. The real fix? Tax the rich. A worker earning 50K pays Social Security tax on every dollar, but a billionaire stops paying after a couple hundred grand. Fix that, and the “crisis” disappears. But the rich won’t allow it--they love tax-funded roads, armies, and bailouts but scream “socialism” when asked to contribute to Grandma’s heating bill.

Privatizing Social Security isn’t about fixing anything--it’s about greed. It’s about funneling more wealth to billionaires while leaving working Americans to fend for themselves. They want your retirement to be a casino where the house--meaning the ultra-rich--always wins. And no, I don’t envy them. If someone handed me a billion, I’d take it--but that’s not envy. The real envy is from those on the right who dream of being rich and oppose progressive taxes, thinking they’ll join the elite. They won’t, but their belief keeps taxes low for the wealthy, consolidating power at the top.

We should expand Social Security, not gut it. Strengthen the safety net, not shred it. If you think supporting retirees is costly, wait until millions of them are destitute. A society that lets its elderly rot isn’t a society--it’s a business. The days when family could always take care of their elders are long gone.

Want privatization? You already have 401(k)s. But Social Security? It’s off-limits.

Here are some more arguments, pro and con:

An Argument Against Privatization of Social Security | Social Security Report

Social Security is in trouble...no doubt about that. In fact, we're now less than a decade from the program reaching its point of insolvency--the point at which all accumulated reserves are fully depleted. These reserves, which had reached a high point of nearly $3 trillion just a little over...

socialsecurityreport.org

An Argument for privatizing Social Security | Social Security Report

Speaking at the firm's Retirement Summit program, Blackrock CEO Larry Fink spoke in favor of individual savings accounts funded by employer and employee contributions and market-based investment management as a better way to ensure continuity of Social Security. He based his comments on the...

socialsecurityreport.org

 

[Gozaburo]

Conservatives love saying people should just save for retirement. Easy to say when you’re not living paycheck to paycheck, crushed by rent and medical bills. Republicans legislate based on fantasy--thrifty, responsible people investing wisely. Democrats legislate based on reality--people struggling to get by. Social Security exists because civilized societies don’t abandon their elderly.

There is a point to be made about the current situation - younger people are apprehensive about funding a SS program they'll never see for a generation (boomers) that has immense amounts of property and personal wealth hoarded away, creating a vast generational class divide. A natural consequence of being alive during the Pax Americana and not being too particular about planning for the future.

And no, Social Security isn’t going bankrupt. The real fix? Tax the rich. A worker earning 50K pays Social Security tax on every dollar, but a billionaire stops paying after a couple hundred grand. Fix that, and the “crisis” disappears. But the rich won’t allow it--they love tax-funded roads, armies, and bailouts but scream “socialism” when asked to contribute to Grandma’s heating bill.

Not that I oppose taxing the rich whatsoever, but if we care about the debt and deficit spending, the math doesn't completely math here when we also look at other government expenditures. Even if we move marginal tax rates back to Eisenhower or FDR levels of taxation, we don't completely resolve the deficit unless we also dramatically cut military spending or have austerity for Medicaid, SS, etc.

 

[ttwtt78640]

Nope, since no private entity should be able to stop paying those ‘entitlement’ benefits or be able to garnish paychecks to collect premiums. The problem with many proposed ‘transition’ plans is that both the new and old retirement/disability insurance systems would have to be funded.

 

[TobyOne]

I wish I had all the social security payroll deductions that I could have put into a 401k or other tax deferred investment. I'd be much better off. Most would. Social security is simple income redistribution.

 

[Helix]

No ****ing way.

 

[Tettsuo]

We, as a country, have tried the experiment of not providing a safety net for the elderly. It was a massive failure. That's the entire reason Social Security was created. Going backward isn't going to fix anything.

 

[Mr Person]

No. SS should follow Al Gore's "lockbox" notion.

Privatization means adding a middleman out only for their own good. What do insurers add to healthcare other than the ability to rape customers for gain by dishonestly denying claims, yadda yadda?


Any "politician" advocating it either wants to rape you themselves, or is advocating your being raped by other monied entitites so they can get donations.

 

[Jessie C]

A huge hell no.

 

[SavannahMann]

I love how they are discussing this now, that the Stock Market is in free fall from their mismanaging the economy. We need to pump Government money into it, and the only way is to Privatize Social Security. How many think the first stock they would buy would be Tesla?

It’s a way to prop up the holdings of the Uber Rich. That’s it.

 

[Bullseye]

No, no, and hell no. The old argument that if you had invested young, you’d be fine at retirement is ridiculous. You're asking a teenager to make life-altering financial decisions? Even if they did, it’s still a gamble, and Social Security is not called “Social Maybe” for a reason. Sure, it’s not enough to live lavishly, but it keeps millions afloat, including this 74-year-old.

Ever notice how the loudest voices for privatizing Social Security are the same ones who want to gut every safety net? Let’s hand over what works to the same Wall Street geniuses who brought us Enron, the housing crash, and banks too big to fail. Because that worked out so well.

Social Security is a guarantee--your retirement isn’t at the mercy of some banker’s bad bets. Wall Street wants to “invest” it, which really means fees, commissions, and middlemen pocketing your money while your retirement fund vanishes. Enron proved what happens when the market “manages” retirement: pensions disappeared overnight. The 2008 crash showed how millions watched their 401(k)s evaporate while Wall Street got bailed out. Had Social Security been privatized, retirees would have been left destitute.

Conservatives love saying people should just save for retirement. Easy to say when you’re not living paycheck to paycheck, crushed by rent and medical bills. Republicans legislate based on fantasy--thrifty, responsible people investing wisely. Democrats legislate based on reality--people struggling to get by. Social Security exists because civilized societies don’t abandon their elderly.

And no, Social Security isn’t going bankrupt. The real fix? Tax the rich. A worker earning 50K pays Social Security tax on every dollar, but a billionaire stops paying after a couple hundred grand. Fix that, and the “crisis” disappears. But the rich won’t allow it--they love tax-funded roads, armies, and bailouts but scream “socialism” when asked to contribute to Grandma’s heating bill.

Privatizing Social Security isn’t about fixing anything--it’s about greed. It’s about funneling more wealth to billionaires while leaving working Americans to fend for themselves. They want your retirement to be a casino where the house--meaning the ultra-rich--always wins. And no, I don’t envy them. If someone handed me a billion, I’d take it--but that’s not envy. The real envy is from those on the right who dream of being rich and oppose progressive taxes, thinking they’ll join the elite. They won’t, but their belief keeps taxes low for the wealthy, consolidating power at the top.

We should expand Social Security, not gut it. Strengthen the safety net, not shred it. If you think supporting retirees is costly, wait until millions of them are destitute. A society that lets its elderly rot isn’t a society--it’s a business. The days when family could always take care of their elders are long gone.

Want privatization? You already have 401(k)s. But Social Security? It’s off-limits.

Here are some more arguments, pro and con:

An Argument Against Privatization of Social Security | Social Security Report

Social Security is in trouble...no doubt about that. In fact, we're now less than a decade from the program reaching its point of insolvency--the point at which all accumulated reserves are fully depleted. These reserves, which had reached a high point of nearly $3 trillion just a little over...

socialsecurityreport.org

An Argument for privatizing Social Security | Social Security Report

Speaking at the firm's Retirement Summit program, Blackrock CEO Larry Fink spoke in favor of individual savings accounts funded by employer and employee contributions and market-based investment management as a better way to ensure continuity of Social Security. He based his comments on the...

socialsecurityreport.org

Over the lengths of time people generally work e.g. 30-35 years stocks overwhelmingly beat the payments SSA award. I once ran my SS contributions through and algorithm that would calculate what my 30yr gain would be. Wasn't even close; on a monthly basis I could take 3-4 times the monthly DD benefit and after twenty years I'd still be able to leave my kids large inheritances.

The downside is that a vast portion of our labor force don't receive any education on the principles, risks and rewards involved. The question of government vs private administration (or both) also needs defining.

Before you adopt the LW "tax the rich" mantra, do a little research. more like kicking the can down the road. They're already taxed quite a bit; unto 70% of current revenue comes from them.

 

[ttwtt78640]

I wish I had all the social security payroll deductions that I could have put into a 401k or other tax deferred investment. I'd be much better off. Most would. Social security is simple income redistribution.

Most didn’t which is why SS was created. Unlike your 401K, SS includes “free” disability insurance benefits.

 

[diz]

So, why is the Social Security program we have better than a forced savings program that tales the same amount out of your check and uses it to pay a fairly priced annuity payment streaming your name when you retire?

People's taxes wouldn't change and they'd be guaranteed a retirement income stream that was worth exactly what they paid in. No more solvency issues ever again, no more demographic concerns, no more inherent unfairness or subsidies. At least after a transition period where you recover from the financial disaster of the current system.

 

[SavannahMann]

So, why is the Social Security program we have better than a forced savings program that tales the same amount out of your check and uses it to pay a fairly priced annuity payment streaming your name when you retire?

People's taxes wouldn't change and they'd be guaranteed a retirement income stream that was worth exactly what they paid in. No more solvency issues ever again, no more demographic concerns, no more inherent unfairness or subsidies. At least after a transition period where you recover from the financial disaster of the current system.

Ok, and who pays the people on it now, or going into it in the next say ten years? I know. Just sell more T bills and ignore the debt ceiling right?

 

[SenorXm/Sirius]

Nope.

1...cant trust private... Look at what happened in 2008...

2...can't trust people to put money in, and keep it there.. They'll hit 65,and most won't have a dime for retirement.. So the government will be taking care of them anyway.. But without them contributing a dime for their retirement..

 

[ttwtt78640]

So, why is the Social Security program we have better than a forced savings program that tales the same amount out of your check and uses it to pay a fairly priced annuity payment streaming your name when you retire?

People's taxes wouldn't change and they'd be guaranteed a retirement income stream that was worth exactly what they paid in. No more solvency issues ever again, no more demographic concerns, no more inherent unfairness or subsidies. At least after a transition period where you recover from the financial disaster of the current system.

Hmm… who funds current SS beneficiaries?

 

[WorldWatcher]

So, why is the Social Security program we have better than a forced savings program that tales the same amount out of your check and uses it to pay a fairly priced annuity payment streaming your name when you retire?

People's taxes wouldn't change and they'd be guaranteed a retirement income stream that was worth exactly what they paid in. No more solvency issues ever again, no more demographic concerns, no more inherent unfairness or subsidies. At least after a transition period where you recover from the financial disaster of the current system.

The premise is that with "private" account, the rate of return would be better than current levels of SS benefits.

While people often say "well if I took this money and invested it, I'd have more money". Which is true on an individual basis, on the other hand that would have to be extrapolated into an entire population and what impact that would have on the financial markets. Would such an infusion of capital in the financial markets continue to provide long term returns that an individual would see today? No one knows and it's a question that I've not seen considered.

WW

 

[MaryP]

No ****ing way.

Well said.

 

[WorldWatcher]

In general I don't have an issue with the idea of "privatization" of retirement funds. There are a number of countries with this model, but that form of "privatization" may not be what people are thinking about.

But in general, I could see:

#1 Retirement savings would still be mandatory, but instead of revenues paying current benefits, revenue garnered from your income is placed into an "account" in your name.

#2 Said account is in a "lock box" until retirement age is reached.

#3 The view of "income" would be changed from current "wages" to "Adjusted Gross Income" used for Federal Taxes. So not only wages, but interest, dividends, capital gains, etc. would be included and subject to the "Retirement Tax". Similar to what employers deduct now, "Retirement Tax" would be collected by all finanicial institutions generating "income" with the appropriate amount remitted to your account with the Retrirement Security Administration [RSA] (renamed from the Social Security Administration). This would allow employers and financial institutions to have a single point of collection and remittence. Any such contributions would be considered "pre-tax" and the growth would be tax free until retirement age when you gain access.

#4 Once received by the the collected funds would be routed to your personnal account after a small (very small) percentage is deducted for administrative overhead.

#5 Within your lockbox account you would then have a selection of plan providers that meet minimum government standards such as Morgan Stanley, Charles Shwab, TIAA, Voya, Vangaurd, etc. to choose from. Then within a plan provider you can select various investment options based on what the offer and your risk tolerance. If you don't choose an active investment plan, the RSA will invest the money for you in something pretty conservative with some growth.
.
.
.
.
The problem, as ttwtt78640, pointed out. Is how to fund current, near term, and mid career benefits which are based on current revenues if those revenues are diverted to private accounts instead of being used to pay current benefits. The change over is likely to take 50-60 years to complete teh change over process.

WW

 

[BabaVoss]

No.

You already have the ability to invest in the markets. Social Security is an insurance program, to provide a safety net. It works for millions of Americans.

 

[diz]

Hmm… who funds current SS beneficiaries?

You borrow it. That is, you take liability you already have off the books and put it on the books. The good news is you also just passed a law mandating a bunch of people lend the government money.

The other good news is you get to honor the first rule of holes: when you're in one, stop digging.

 

[diz]

The premise is that with "private" account, the rate of return would be better than current levels of SS benefits.

While people often say "well if I took this money and invested it, I'd have more money". Which is true on an individual basis, on the other hand that would have to be extrapolated into an entire population and what impact that would have on the financial markets. Would such an infusion of capital in the financial markets continue to provide long term returns that an individual would see today? No one knows and it's a question that I've not seen considered.

WW

Not my premise. All I said is that you'd pay fair actual returns on the money and purchase a fairly priced annuity upon retirement.

In my view if the government forces you to save in a government account the government should pay you what it pays other borrowers. US treasury rates.

You can argue the US government shouldn't force you to save if you like, but I'm only here to argue that if the US government forces you to save it should pay you a fair rate.

 

[diz]

In general I don't have an issue with the idea of "privatization" of retirement funds. There are a number of countries with this model, but that form of "privatization" may not be what people are thinking about.

But in general, I could see:

#1 Retirement savings would still be mandatory, but instead of revenues paying current benefits, revenue garnered from your income is placed into an "account" in your name.

#2 Said account is in a "lock box" until retirement age is reached.

#3 The view of "income" would be changed from current "wages" to "Adjusted Gross Income" used for Federal Taxes. So not only wages, but interest, dividends, capital gains, etc. would be included and subject to the "Retirement Tax". Similar to what employers deduct now, "Retirement Tax" would be collected by all finanicial institutions generating "income" with the appropriate amount remitted to your account with the Retrirement Security Administration [RSA] (renamed from the Social Security Administration). This would allow employers and financial institutions to have a single point of collection and remittence. Any such contributions would be considered "pre-tax" and the growth would be tax free until retirement age when you gain access.

#4 Once received by the the collected funds would be routed to your personnal account after a small (very small) percentage is deducted for administrative overhead.

#5 Within your lockbox account you would then have a selection of plan providers that meet minimum government standards such as Morgan Stanley, Charles Shwab, TIAA, Voya, Vangaurd, etc. to choose from. Then within a plan provider you can select various investment options based on what the offer and your risk tolerance. If you don't choose an active investment plan, the RSA will invest the money for you in something pretty conservative with some growth.
.
.
.
.
The problem, as ttwtt78640, pointed out. Is how to fund current, near term, and mid career benefits which are based on current revenues if those revenues are diverted to private accounts instead of being used to pay current benefits. The change over is likely to take 50-60 years to complete teh change over process.

WW

You're not too far off what I'm talking about I'd just skip the #5 part and effectively force everyone to buy US treasuries.

I'd leave the #5 stuff to 401(k)s -in other words kinda like we have now.

Generally in finance we assume risk and return are related. You can "probably" make higher returns investing in stocks over the long term, but not sure taking that risk is consistent with a government mandated savings program - supposedly for your own benefit.

But we know the fair rate for money lent to the government. It's the US treasury rate. People can complain about the involuntary nature of it, but we already have the government taking that money from us now so it's not any worse in that respect.

I suspect big government types won't like it because it destroys the illusion the government is handing you something. You are clearly and specifically being forced to save and getting your own money back.

 

[WorldWatcher]

Not my premise. All I said is that you'd pay fair actual returns on the money and purchase a fairly priced annuity upon retirement.

In my view if the government forces you to save in a government account the government should pay you what it pays other borrowers. US treasury rates.

You can argue the US government shouldn't force you to save if you like, but I'm only here to argue that if the US government forces you to save it should pay you a fair rate.

The government isn't "saving in a governemnt account". If it were your taxes would go into an account and pay future benefits.

Current revenues pay current benefits, there is no "account" with your money.

That's the way it's been for the last 90 years.

WW

 

[VanceMack]

In a perfect world there would be a very small need for social security. Individuals would provide for their own retirement needs and SS would be limited to truly disabled people and widows.

But we dont live in a perfect world. SO it is needed, and no, it shouldnt be privatized.

There SHOULD be an opt out process for people...but that process should be a very clear cut in stone process. If you choose private investment thats your right. If you choose to not invest and save...again...thats your right. But you do not have a right to come back later and demand to be taken care of.

But its probably best it be left as is.

 

[Hari Seldon]

No, no, and hell no. The old argument that if you had invested young, you’d be fine at retirement is ridiculous. You're asking a teenager to make life-altering financial decisions? Even if they did, it’s still a gamble, and Social Security is not called “Social Maybe” for a reason. Sure, it’s not enough to live lavishly, but it keeps millions afloat, including this 74-year-old.

Ever notice how the loudest voices for privatizing Social Security are the same ones who want to gut every safety net? Let’s hand over what works to the same Wall Street geniuses who brought us Enron, the housing crash, and banks too big to fail. Because that worked out so well.

Social Security is a guarantee--your retirement isn’t at the mercy of some banker’s bad bets. Wall Street wants to “invest” it, which really means fees, commissions, and middlemen pocketing your money while your retirement fund vanishes. Enron proved what happens when the market “manages” retirement: pensions disappeared overnight. The 2008 crash showed how millions watched their 401(k)s evaporate while Wall Street got bailed out. Had Social Security been privatized, retirees would have been left destitute.

Conservatives love saying people should just save for retirement. Easy to say when you’re not living paycheck to paycheck, crushed by rent and medical bills. Republicans legislate based on fantasy--thrifty, responsible people investing wisely. Democrats legislate based on reality--people struggling to get by. Social Security exists because civilized societies don’t abandon their elderly.

And no, Social Security isn’t going bankrupt. The real fix? Tax the rich. A worker earning 50K pays Social Security tax on every dollar, but a billionaire stops paying after a couple hundred grand. Fix that, and the “crisis” disappears. But the rich won’t allow it--they love tax-funded roads, armies, and bailouts but scream “socialism” when asked to contribute to Grandma’s heating bill.

Privatizing Social Security isn’t about fixing anything--it’s about greed. It’s about funneling more wealth to billionaires while leaving working Americans to fend for themselves. They want your retirement to be a casino where the house--meaning the ultra-rich--always wins. And no, I don’t envy them. If someone handed me a billion, I’d take it--but that’s not envy. The real envy is from those on the right who dream of being rich and oppose progressive taxes, thinking they’ll join the elite. They won’t, but their belief keeps taxes low for the wealthy, consolidating power at the top.

We should expand Social Security, not gut it. Strengthen the safety net, not shred it. If you think supporting retirees is costly, wait until millions of them are destitute. A society that lets its elderly rot isn’t a society--it’s a business. The days when family could always take care of their elders are long gone.

Want privatization? You already have 401(k)s. But Social Security? It’s off-limits.

Here are some more arguments, pro and con:

An Argument Against Privatization of Social Security | Social Security Report

Social Security is in trouble...no doubt about that. In fact, we're now less than a decade from the program reaching its point of insolvency--the point at which all accumulated reserves are fully depleted. These reserves, which had reached a high point of nearly $3 trillion just a little over...

socialsecurityreport.org

An Argument for privatizing Social Security | Social Security Report

Speaking at the firm's Retirement Summit program, Blackrock CEO Larry Fink spoke in favor of individual savings accounts funded by employer and employee contributions and market-based investment management as a better way to ensure continuity of Social Security. He based his comments on the...

socialsecurityreport.org

**** no. The fees alone will cost the taxpayers billions.