Social Security idea - what do you think?

[NWRatCon]

My concern about "privatization" is that it is the Republican party's strategy to destroy public programs, not to make them better.

I agree.

 

[NWRatCon]

It's like what my wife says about surgery: "There is no medical condition that surgery can't make worse."

 

[Individual]

Nope, your suggestion includes a tax increase and (I assume) still caps the maximum SS benefit level (which is a ceiling).

Please elaborate, pointing out what you find objectionable.

 

[ttwtt78640]

Please elaborate, pointing out what you find objectionable.

You have yet to specify what determines a person’s SS benefit level under your new SS system.

 

[Individual]

You have yet to specify what determines a person’s SS benefit level under your new SS system.

That could be open to change, but currently the maximum benefit for someone who retires at age 70, who earned the maximum FICA taxable income for the previous 35 years would receive an annual benefit of about $58,476.
There are many things which would only be resolved by discussion.
Basically, the lowest income earners would be taxed at a 15% tax rate, while the very highest income earners would be taxed at a 37% tax rate.

 

[ttwtt78640]

That could be open to change, but currently the maximum benefit for someone who retires at age 70, who earned the maximum FICA taxable income for the previous 35 years would receive an annual benefit of about $58,476.

That limit is based on the SS ‘contributions’ cap.

There are many things which would only be resolved by discussion.
Basically, the lowest income earners would be taxed at a 15% tax rate, while the very highest income earners would be taxed at a 37% tax rate.

Exactly, which is a tax increase.

 

[NWRatCon]

That limit is based on the SS ‘contributions’ cap.

That concept was based upon a very different economy. There is no rational basis for keeping that correlation. It undermines the very purpose of Social Security, which is an insurance program, specifically "federal Old-Age, Survivors, and Disability Insurance (OASDI)".

 

[Individual]

That limit is based on the SS ‘contributions’ cap.



Exactly, which is a tax increase.

That could be changed.

Primarily on those with the highest income, but without increasing the current highest tax rate.

 

[Cosmo]

I'm thinking of applying this to a single high yield stock just to test the general theory. Like VZ which pays 6.42%. But if all of a sudden the government made a move that had billions of dollars being invested into VZ, its stock price would skyrocket due to all of the buys and all of a sudden the dividend rate would plummet.

Same would apply to HYSAs since banks would see so much desire to buy CDs and such that they'd lower the rates. After all there's only so many mortgages they can turn around and give out to make their spread on the HYSA rates they have to pay.

I suspect something similar would apply to the market in general if all of a sudden a monster-sized buyer like the US government appeared and started earmarking enormous amounts of dollars to buying up stock and mutual funds.

There's also the whole inflation thing. $800k is barely enough to buy a house in some parts of America today. In 67 years it could be the price of a fancy car.

 

[jaeger19]

Well, not the person themselves is my thought. It’s perhaps a more efficient and cost effective means of providing support to individuals. It’s not in your name specifically to do as you like, but it would be in your behalf. I would imagine that a private investor is holding the money, much like they would in a typical ROTH IRA. The only thing is that the government sponsors $5000 initially. But...If you don't contribute to the investment, the final "tally" is all they are going to give you, so to speak. I think $850,000 is more than they would actually receive anyway, so it seems like a win-win to me.

Problem is..what if they were invested in enron..or blockbuster?

That's the problem with all these mote privatized schemes..they all assume.." well you will make x percent".
Or you may lose your shirt. ..that they don't account for.
And all these private firms are going to want fees..and to maximize those fees.

A better idea would be to continue ss.

But...incentive companies to have a retirement plan or savings program and employees had to OPT OUT .

So when you had a raise..a portion or all of it went into a fund...unless you opted out.

People are generally lazy when it comes to finances and if every time you got a raise it went into an investment that you had to opt out of.. individual savings investment would skyrocket

 

[Visbek]

Some key questions:

1) Who in the federal government decides how that money is invested in an “aggressive portfolio”?

It could just go into an S&P 500 index fund. You'll still need a small fee to prevent fraud etc., but won't need any active management.

Australia's pensions go into privately managed funds. The private funds, however, often charge excessive fees.

One fund settled for $100 million (AUD) for overcharging its customers.

Colonial First State agrees to $100m class action settlement

Almost five years ago Slater and Gordon (ASX: SGH) launched its Get Your Super Back against Commonwealth Bank (ASX: CBA) and its then subsidiary, Colonial First

www.businessnewsaustralia.com

The largest fund got busted for double-charging 100,000 customers.

AustralianSuper's 'alarming' $70m double-up on customer accounts sparks calls for wider probe

Australia's biggest superannuation fund reveals that it has been double charging some customers, and will refund around $70 million in fees and insurance costs to about 100,000 people.

www.abc.net.au

Funds that proffer themselves as "ethical" wound up investing in munitions manufacturers.

'Totally immoral' weapons found in share holdings of Australian ethical super funds

An ABC investigation into superannuation funds offering members "ethical" or "socially aware" options unearths millions of dollars of retirement savings invested in companies that make some of the most controversial and devastating weapons of war.

www.abc.net.au

The list goes on. Going private would be much worse than an index fund that is minimally managed by the federal government.

 

[Deuce]

Wouldn't the result of this be that the government owns an ever-growing portion of our stock market?

 

[Individual]

Does the name "Trump", "Harris", "Biden", or some other individual politicians name need to dominate a thread to give it life?