Survey Says: Readers Respond On SS Privatization
And this week, we asked readers, 'Is it time to move forward with some version of privatization - or is it time to put that idea back on the shelf?'
Some weeks you can predict how things will come out just by glancing at the responses as they come in. Not this time. Not since last November has a polling been so close – all in all, just over half (and, at 50.667%, we DO mean just over) said it was time to move forward with SOME version of privatization. The margin, obviously, was razor-thin. But, overall, Enron and the slumping markets didn’t seem to have changed anyone’s opinion. Rather, it largely seemed to reinforce opinions that had already been formed.
‘I’m for privatization if only to
expose the Social Security Trust
‘Fund’ for what it really is: smoke
and mirrors. A fist full of zero-coupon
treasury bonds may sound very
investment like, but strip away the
Orwellian double-speak and all
you’ve got left is the certainty of a
crushing tax burden levied on
generation X, Y and Z by a baby
boomer majority who found themselves
sitting on a three legged stool with
two legs missing.’
Some readers DID draw a distinction between their personal preference – and what they thought would be good/necessary for the country as a whole – for example, ‘ While I personally would like to have that 14% chunk of my pay to invest, I don’t think most Americans would know how to invest it. Also, they would probably expect the government to bail them out if they screwed up.’
Some other VERBATIMS :
‘ The math is simple. If we don’t do privatization my generation can forget about social security after the baby boomers suck the trust dry. If we do privatization at least we have a shot, risks and all.’
‘ Of course the past year hasn’t been good for anyone in the stock market, but I am watching janitors struggling to decide which investment plan is best for them. I feel the majority of Americans will have the same problems with privatized social security. Everyone has their niche in life, I don’t want a stockbroker waxing my floors, and I don’t want a janitor risking his retirement.’
‘ I pay thousands of dollars to Social Security now, only to get pennies when I retire. Sounds like an investment in Enron or an investment in Social Security yield the same results to me.’
‘Privatization of Social Security is an obscene idea. Only the financial service industry and the largely Republican politicians that they fund would benefit from this steal from the poor and give to the rich scheme.’
‘ The very first step toward privatization should be all the beltway types canceling their own private retirement programs they’ve built for themselves and take a place in line with the rest of us.’
And this week’s EDITOR’S CHOICE: “I’m for privatization if only to expose the Social Security Trust ‘Fund’ for what it really is: smoke and mirrors. A fist full of zero-coupon treasury bonds may sound very investment like, but strip away the Orwellian double-speak and all you’ve got left is the certainty of a crushing tax burden levied on generation X, Y and Z by a baby boomer majority who found themselves sitting on a three legged stool with two legs missing.”
Thanks to everyone who participated in our survey!
For MORE on the Social Security proposals currently on the table, check out SAVING THE “TITANIC” .
The question was: Is it time to move forward with some version of privatization - or is it time to put that idea back on the shelf?
THE VERBATIMS
The social security monster has grown too expansive and rules by the principle of robbing Peter to pay Paul. The system is a monster and could never be changed but should be and it should include an option of privatization.
Put the idea back on the shelf. Keep it as a "floor" for all participants regardless of their pay and/or financial skill. Let participants play with their 401(k) and other personal assets but leave this one as is.
I believe some type of privatization is needed, but would need to be very tightly controlled. Rather than giving individuals the opportunity to choose their own Social Security investments, why not put that in the hands of professional money managers. They probably have a better shot at increasing the current, paltry return of the Social Security funds than the average investor.
It is time to move forward with some form of privatization. SS returns only 1% on invested assets.
People who point to the Enron debacle as a reason not to put Social Security funds into the stock market are fostering hysteria. A well-diversified portfolio (which is the only option the government is talking about) would survive such a blow, and it would even survive a period of a bear market. The fact remains that the current commitments are unsustainable, that the implicit promise of a government funded retirement can be swept away by Washington, and that people with several decades before retirement can substantially improve their nest eggs if even a portion of it goes into equities. The compelling logic of this proposal is unchanged.
The "privatization" of Social Security should never have
come off the shelf in the first place! We need a
"social" security system and we need individual "savings"
plans. We don't need to weaken one to force the
other. Social Security is a government income
redistribution system that is designed like a defined benefit
pension program for all income levels, and heavily weighted
toward the lower levels. Individual savings plans
should be expanded and simplified, and investment choices
should be available that are safe as well as risky, but you
cannot keep people from making greedy mistakes and having
them "know" that the government will bail them out.
As far as Enron 401(k) problems are concerned, if the
employer forced people into company stock with their own
money and knew that it was all a scam, then the bosses should
be punished and the losses returned. If the employees
were being greedy and ignoring the "all eggs in one basket"
admonition, then at least some of the blame is their
own. How far must the rest of us go in order to save
others from themselves?
I vote for shelving the privatization of any part of Social Security.
Move forward
Privatization of Social Security scares me. Enron is a prime example of what happens not only when company misinforms people, but also when the people are not educated well enough to make good decisions. Who will be educating people as to the need of diversification of their portfolios? Who will be explaining to them about the different types of investments available to them? Will they be allowed to just go out into the market at large or will there be some control on the investments offered as in a (k) Plan?
The government recognizes the need for communication and education in (k) Plans, will there be any for social security accounts? If so, who will be providing it? Sounds like more money will be taken away from social security in order to establish a unit to oversee these accounts and provide education.
I agree that the current rate of return is not sufficient to meet the growing needs of social security. However, I think we could do better with the investing of the monies within the current system.
Social Security tax is not an elective and should not be treated as a deferral. The government is talking about giving "younger persons" the ability to invest their monies. As a person in their 50's, I'm concerned about who is going to make up for their losses? Money that is supposed to be there now for current retirees and those of us getting close, will now be taken out and given to "younger" folks to invest?
It would also help if the government were not allowed to
take "surplus funds" from social security to balance their
budgets. How can these funds be considered "surplus"
when we know they will not last at the current rate.
Social Security only provides a part of the retirement package. Therefore, inherently, there is diversification - if taken together with private savings/investments. How many older citizens do we want to live under a bridge? What is wrong with at least having the very bare minimum "guaranteed"?
I firmly believe it is time to can the idea of privatization as it is now. If we allow each person to invest their funds for retirement then there will inevitably be big gamblers who end up with nothing at retirement time. This will cause a public outrage and evoke sympathy for the greedy pathetic individuals.
We should continue with Social Security as a safety net,
and allow all individuals to invest their money as they see
fit. Education and professional management is needed
for those who need help. Greed is human nature and we,
in an effort to save the greedy and stupid, are trying to
legislate it away. Keep the present system as it is now
and allow employers to give advice and education to employees
without the fear that they will get sued.
You would think that Enron would squash any chances of Social Security being privatized but in effect via EGTRRA it already has been privatized. Now people have a stronger incentive to save for retirement and the tax rates have been reduced. People are allowed to choose their investments and have so-called professionals invest for them. Thus, one of the other legs on the three-legged stool has been refurbished while the social security leg awaits another band-aid and the other leg has been converted to a cash balance plan.
Privatization requires large transition costs. During transition, do we pay full benefits to retirees or do we increase taxes? Privatization advocates won't admit that during transition, cash can only be spent once.
While I personally would like to have that 14% chunk of my pay to invest, I don't think most
Americans would know how to invest it. Also, they would probably expect the government to bail them out if they screwed up. Perhaps something similar to those education savings accounts could be set up for social security - your funds are invested in a certain type of investment depending on the number of years you have until retirement - at least that's what they do in Iowa with the education savings account, which is where we opened one up for Wright. It's just a thought....
So - the short answer - NO - put the privatization idea on the shelf. As much as I personally like it, too many politicians would spoil it somehow.
The math is simple. If we don't do privatization my
generation can forget about social security after the baby
boomers suck the trust dry. If we do privatization at least
we have a shot, risks and all. This seems so simple to me.
Make privatization rules like the rules on 529 plans -
investment options are only in funds and can only be changed
once per year. Diversification solved. Churning solved.
Retirement savings bolstered. End of story.
Time to move forward. Crooks will always be a problem.
Privatize it!!! It is my money, I should be able to invest it however I see fit. If my investment goes south and I lose my shirt, then it is my responsibility. Allow people to make their own choices; I think the American public is smart enough to diversify to the point that one company failing wont kill their portfolio.
I pay thousands of dollars to Social Security now, only to
get pennies when I retire. Sounds like an investment in
Enron or an investment in Social Security yield the same
results to me.
Social Security should be maintained as a secure (well as secure as Uncle Sam can make it) safety net for retirement. We have enough risk with our 401(k)'s and ESOP's. Privatization, leave it on the shelf or better throw it in the trash.
It's time to move forward cautiously. The key lies in a responsible and fiscally sound transition policy, something this administration seems incapable of addressing. They might have to roll back some of their precious (and absurd) (and irresponsible) tax cut.
Long term I have faith in the market's higher returns. Some form of privatization to allow people trying to build their retirement funds to tap into this is good, esp. for younger workers who can ride the market ups and downs for a while. The percent in non-guaranteed investments should be limited, though, maybe even ratcheted down as people age. Important regulations will be installed to prevent more Enrons. We should not fear the markets or the future because of Enron.
Privatization in a pure form is a bad idea for the social security system and the financial markets.
No, we should not move forward with privatization for Social Security.
I think it's time to put the idea of some version of privatization back on the shelf. When you're planning for retirement a portion of your investments should be in fixed income securities. Why not consider the social security portion as part of your fixed income investment. At least that portion will continue to grow, albeit slowly.
Maybe this is for selfish reasons, but privatize it already! The government has already proven they can't do the job.
It is absolutely time to move toward privatization for pension and retirement funding. The Government can serve a valuable service by setting up some guidelines and some very stiff penalties for fraud and violations since the stakes are so high. The Government needs to get out of businesses it has proven for almost sixty years it does not have the self-restraint to be in. The fact that the alleged "trust fund" has nothing but IOU's says Congressmen, Congresswomen and Senators cannot be trusted to hold the actual bankbook.
The very first step toward privatization should be all the
beltway types canceling their own private retirement programs
they've build for themselves and take a place in line with
the rest of us. Once that proves to work let's look at
all the other businesses government can get out of like
education, farming, airlines, the list goes on.
It is DEFINITELY time to move forward with privatization.
I would love the idea of privatizing Social Security due to the fact that I am 30 years old and am not expecting to receive any form of social security in my retirement. In all of my calculations for retirement I input "0" for Social Security. If it's privatized, the government cannot take it or "borrow" from it for their pork-barrel projects. At least if it's privatized, I know I'll have something.
We allow the employees to make investment choices with their Money Purchase Pension Plan. Of course the past year hasn't been good for anyone in the stock market, but I am watching janitors struggling to decide which investment plan is best for them. I feel the majority of Americans will have the same problems with privatized social security. Everyone has their niche in life, I don't want a stockbroker waxing my floors, and I don't want a janitor risking his retirement.
I don't believe the answer necessarily is to privatize - it potentially could lead to other (some hidden) administrative costs not foreseen - but I do believe that a small portion of the SS Fund should be invested in the Equity market, for the obvious benefits diversification offers.
For myself I would say privatization, but for many I just don't see them being able to effectively manage it.
Privatization assumes participants are educated/informed enough to make these important decisions. I have seen too many participants make dumb decisions, either too conservative or too aggressive or too lacking in diversification. I think less than 1 in 10 are capable of managing their funds appropriately.
My preference would be for it to remain in the government's hands, hire informed investment councilors and restrict the FICA funding to only this trust fund rather than funding wars and other deficits. If they manage the fund appropriately, geared to when the funds will be needed for retiring baby boomers, this will work better than any other method. As a post-baby boomer, this is the only real chance there is to me seeing a penny of my contributions. I exclude it from my personal retirement calculations as it is.
Privatization of Social Security is an obscene idea. Only the financial service industry and the largely Republican politicians that they fund would benefit from this steal from the poor and give to the rich scheme.
As someone with a strong financial background and interest
in the financial markets, I would love to see social security
privatized. I believe that even with a conservative
portfolio, I could produce better results with the 14% of
salary contributed to the plan by my employer and me.
However, those who are not trained in financial matters will
have difficulty and there are bound to be many poor
decisions. Perhaps some type of privatization utilizing
lifestyle-managed funds based on predetermined age/risk
factors would be a suitable solution.
Privatization could be the second biggest mistake the government ever made with Welfare being the first of course.
I think that the Feds want to privatize SS just to get off the hook for future benefit payments, just like companies who adopt DC or Cash Balance plans.
The problem with the government is that politics will get
in the way and 20 years from now they will agree to pay
people who lost all their savings in the market the same
benefits they would have received if privatization never
happened.
Privatization if for no other purpose will provide an opportunity for an enormous number of people to learn about wise investment strategy. As it stands now our 401K Plan struggles to maintain a 2/3rd's participation rate. The people that fill our large number of lower paying positions that cannot be convinced to participate in our plan (without a company stock option) prevent it from getting any higher.
Those outspoken non-participants see these unfortunate Enron employees (greedy is the better descriptive term) on the national news that have not practiced "DIVERSIFICATION" and destroy any progress the education efforts have made to encourage participation. Privatize! Force the education and please provide a better default fund than a negative election plan's stable money fund!!!
Wow does that ever sound like "Big Brother"
"Privatization" is nothing but a marketing scheme by companies who pretend not to know that Social Security was never meant to be a retirement program.
I think that it would be GREAT if we could invest Social Security funds in the stock markets, but I don't trust in government or private enterprise to do that.
I think that we need to find someone who is brave enough to acknowledge that the Social Security program was never an investment program. It is an inter-generational wealth transfer program. It worked well (sort of like a giant Ponzi scheme) so long as each succeeding generation produced more workers than the previous, and that people obliged by dying within a few years of retirement. But now that retirees are living longer, and the Boomer Bulge is approaching retirement, the chickens are coming home to roost.
Converting the Social Security system is full of land mines, and it would have a lot of catching up to do (meaning funding) in order function as an investment program. Higher social security taxes would be required to build up the fund, and I personally am not excited about giving up even more of my income to fund someone else's retirement. (Somehow I think I am not alone in that position!)
We will probably need to tweak Social Security. Lower the COLAs, maybe even lower the actual benefit formulas. But at the same time, liberalize IRA's. Let everybody participate, even if company retirement programs cover them. Raise the contribution limits. Maybe even make some level of participation mandatory. (In essence, make a new program that actually functions like many people's mistaken concept of Social Security.) But don't allow pooling of the funds. Keep individual accounts separate. Limit the investments to broad-based funds or indexes to mandate diversification. But the key will be to recast Social Security as the bare minimum "safety net" that it was intended to be, not a full-fledged retirement program.
I've always thought that privatization was a good idea. Nothing that has happened in the past few months has made me change my mind. However, there needs to be a way to keep government as far away from the details on this as possible so they don't muck it up. Who would be in charge of regulation? That's the key question.
It is definitely time to privatize Social Security. Better some funds be in the employee's account than an 'IOU' from the Federal Government. Many of us expect we will be told that we are 'already rich' so there is no need to collect.
This is absolutely the time to move forward with semi-privatization of social security. Since public policies inevitably have unintended consequences, the Enron disaster might actually be an enlightening factor in determining policy design. I believe that a well-crafted plan could harness the power of capital markets to advance retirement savings while controlling the system to ensure security. It won't be easy, but it's a must-do. As a Gen-Xer, I'm acutely aware of the failure of social security to handle demographic realities. It's probably too late to fix the system before the upcoming Baby Boom retirement, but we need to learn the lesson and get started on the changes just the same.
For us younger folks, what social security?
Seriously, I do believe Social Security should remain in the hands of the government (did I just say that?). However, Social Security is something I will not depend on for much of my retirement security and have therefore taken my retirement savings responsibility into my own hands. As a retirement plan manager, we should be preaching this same lesson.
It is time to put aside the idea of privatization of the Social Security System.
Realistically, if they did privatize the system and another ENRON (or just plain investor incompetence) wiped out a large number of people's savings the government would be forced to step in and replace those savings in whole or part to offset damage to the individual's financial situation (welfare, you can't leave people destitute, in this country we don't like people begging in the streets), the country's economy as a whole, consumer confidence in general and to avoid political parties losing votes. There is no way that this nation's government would really allow all or part of an individual's social security income to be lost. No matter what plan they propose.
I realize this would have been a windfall to companies offering retirement accounts if private companies ran it. But it is just as likely it would have led to the same kind of financial scandal the Bureau of Indian Affairs is facing with the missing income from property it held in trust for Native Americans. They don't know what they got, when they got it, whom they got it for and who if anyone they paid. Did anyone ever think through how this would physically be handled? Would there be an income minimum before a person was eligible to invest money in financial markets?
Or how they would explain to the millions of people in this country that at $8 per thousand (approximately) a paycheck how long it would take to pay for one share of stock plus the fees to purchase and the fees to pay for this? It would be a massive recordkeeping nightmare. Plus if the government had to cover the expenses (few politicians are going to pass the expenses to the investor) from where would the money to pay for the program come? This would hardly be a daily type program and if it were could you imagine the effect on the markets when people panicked? Who would monitor this? How would fraud be covered?
In the real world given the level of greed and ignorance of most investors and investment companies and the expediency of most politicians a "privatized social security system" would lead to less for the individuals lest able to afford it at a greater cost to most taxpayers.
I think it is time to move forward with privatization however; the plan design needs to take into consideration options for those who lack financial savvy. I believe it should offer in its investment portfolio some type of "lifestyle" fund with low, medium, and high-risk features. It would also need to offer a default investment for those "deer in the head-lights" afflicted individuals that won't be able to make up their minds about investment choices.
We need to move forward with privatization because it will reinforce the need for individuals to take responsibility for planning ahead. As long as Uncle Sam is there to fall back on, people will pass off this responsibility.
Privatization along the lines of the Chilean system would add tremendous value to Americans' retirement security while getting the federal government out of a business it has no right to be in in the first place.
I was not that keen on privatization before Enron. Enron really doesn't impact my opinion. Two market down years shows why I'm against privatization. Years and years of up markets prompted the privatization idea. Social security is low reward because its low risk...as it should be. Let people take risk with other money. What Enron showed is everybody wants the upside, but when it goes down, it's always somebody else's fault. Just imagine the blame game with privatization. People want privatization because of greed. Sometimes greed is not good (apologies to Gordon Gecko; it was an entertaining movie.)
I take the "fifth", and if I can't, I knew nothing about that matter...after all, my interest in Social Security is so small when compared to the billions involved. I would like my payoff now.
What's left to privatize?
Responding to the subject of the privatization of Social Security: As long as the US government is willing to back the "defined benefit" structure as it is, I would prefer it stay the way it is. The liability for it then remains with the government. If it changes to a privatized structure, where we choose between different investments, the risk falls us and we could lose substantially. No, I would not prefer that.
It would seem to me that now is the best time for partial privatization of Social Security, not when the NASDAQ is at 5,000.
Is the issue about privatizing or overhauling the entire system? What concerns me is the fact that the federal employees have a totally separate system that seems to far exceed social security. Doesn't it say something when our own government will not use the same system it requires the rest of us to use?
I think it is time to move forward with some type of privatization. Check with Galveston, TX.
A possible solution to a way to get to a funded retirement system is to get a more realistic asset allocation for the public retirement system i. e. social security. This means getting to something like a 50% equity to 50% fixed income model, which has been well documented by the pension industry over a considerable time span.
The idea of private accounts should just be seen as a relatively inefficient way to get to a better asset allocation for those citizens willing to pay attention to the knowledge base we have regarding retirement savings. The term private account has a nice political ring to it, so some politicians found it helpful to their elections and perhaps a way to move toward a needed reform. The investment industry jumped on board because they see an opportunity for high fees form unorganized small account investors - surprise - surprise! The problem has been that our political leaders [?] have not had the will to deal with the basic issue.
Yes. I think it is the only way the system can survive.
Privatization of Social Security? How did the system get into the mess it's in? Lawmakers did their own version of "Enron Accounting". If you really want to fix the system, tell the lawmakers and government employees that they will no longer have a separate system. They are now stuck with what they have developed for the rest of us. I bet Washington DC would move so fast that, in comparison, even Apollo Anton Ohno would look slow.
ENRON highlighted what intelligent plan sponsors have always known: diversify. What we should learn from that lesson is that Social Security is a highly concentrated plan investing solely in below market government bonds. Privatization with it's myriad of options is the obvious answer.
Privatize Social Security? Only if we want to have a huge problem in the future when all those workers who invested their paltry 2 or 3% in the market realize they don't have any money to retire - and I for one don't believe we will "let them eat cake." How we can expect rank and file workers to make good investment decisions - or even save enough on their salaries - is beyond me. The fact is that Social Security is the single most successful social insurance program in the history of this country, and it's part of the contract between generations - while we work, we pay taxes to educate the children, who in turn pay taxes to support us in our old age. I look at my Social Security taxes as payback for my education and I'm happy to pay it. I expect the same in return.
I think it's time to shelve all thoughts of privatization!
I think it's time to put the idea of privatization of
Social Security on the back burner. The average
American doesn't have the necessary skills to make complex
investment decisions or even the time for that matter to
spend researching investment options. Social Security
at this point has a guaranteed pay out. A private plan
would not have a guaranteed pay out but rely solely on a
person's ability or luck in making successful investment
decisions. Then there is the issue of whether some
people would be forward thinking enough to invest that money
for their retirement. Some people given the choice
between spending the money now or waiting to see the payoff
in their retirement years would choose to spend it now.
This is similar to the problems faced in the health care
insurance sector. Many people would rather have the
disposable income now and risk that they won't need health
care. I think the best policy would be to encourage
supplemental retirement savings/ investment accounts.
This way you have the guaranteed pay out of social security
and are rewarded for having the forethought to save and
investment more now for your retirement
years.
Regarding privatization, I would vote that we should move ahead. However not all of Social Security should be privatized. The privatization should be done over time at certain % intervals and there must be controls in place so that the investments are in a large basket of assets, like the S&P 500, Wilshire 5000, etc. where the risk is minimized and the fund is reflective of market as a whole. You should not be allowed to invest in individual stocks.
We need to have a way to monitor the performance of the
money that is privatized to help prevent large deterioration
in a persons retirement assets and make sure they are
reaching their retirement goals.
Now is the best time to privatize social security as long
as that privatization comes with support. Individuals
can be responsible for their retirement planning but most
could use the help of a qualified financial advisor.
Any privatization scheme will be incomplete without making
that assistance available.
Back on the shelf!!! Enron once again proves that
privatization can create even more problems - as people just
don't know the proper way to handle their money. How
many of those Enron retirees were left penniless because of
putting too much money into one stock (Enron)? Many
used their own funds to buy additional Enron stock instead of
diversifying. What happens when you give SS funds to
the guy on the corner who pumps gas and one of his customers
gives him a great stock tip about Widget company coming up
with a cure for cancer in the next two - and he moves all his
money over there. Then he finds out that Widget company
builds lawnmowers (when he hears of their bankruptcy on the
news). How many people will do their homework and truly
understand the basics of investing? Even scarier, how
many people in this country can't even read or write English,
yet we're going to allow them to invest their funds on their
own? Gives me hives just thinking about it.
We must absolutely privatize Social Security. By
this I mean that all assets in the Social Security Trust Fund
must be invested in income producing assets that can be
identified and accounted for. Bravo to the latest
Social Security Commission who bravely identified for all
Americans to see that the only asset in the trust fund is a
giant IOU to be paid for by taxpayers and retirees. You
need only to look at the CAL-PERS retirement plan and similar
plans that offer a 2% at age 55 retirement benefit (sometimes
3% at age 50 for safety employees) with contributions similar
to what Social Security mandates. You should survey
CAL-PERS participants and see if you could find any one
person who would give that up for Social Security.
Furthermore, people must "get it" now and make changes "now"
as it is already too late for my generation.
I'm for privatization if only to expose the Social
Security Trust "Fund" for what it really is: smoke and
mirrors. A fist full of zero-coupon treasury bonds may
sound very investment like, but strip away the Orwellian
double-speak and all you've got left is the certainty of a
crushing tax burden levied on generation X, Y and Z by a baby
boomer majority who found themselves sitting on a three
legged stool with two legs missing. But that's too
depressing, so let's all just close our eyes to the big Ponzi
scheme and keep marching toward the cliff since all the
people who are responsible will either be dead or out of
office by the time the you-know-what hits the fan.
Don't proceed with privatization. It's too much a
political mallet used by the Democrats to scare voters to
them and is based too much on the assumption of upwardly
moving markets. We need to face up to the painful
policy and benefit cuts decisions caused by our declining
birth rate and the 30 to 40 million abortions over the last
30 years.
It's time to put the idea of "privatizing " Social
Security so far on the back shelf it never comes up
again. Social Security is an intergenerational transfer
(that's the social part) and a defined benefit plan (that's
the security part). It is not an individual savings
account.
I say let's put the privatization idea back on the shelf.
Social security is supposed to be a safe investment. So of
course we sacrifice expected return for that level of
security. Those who don't need that level of protection can
adjust their personal investments to balance the risk in
their entire retirement investments. But there are those who
do need that level of protection, and if it is taken from
Social Security they very likely will not be able to get it
elsewhere. However, there is some truth to the
"Enron-in-waiting" fears, I just don't think privatization is
the solution.
It is time to change the system. My grown children do not
believe that they will ever see any social benefits. I am
inclined to agree with them.
I'm tempted to say NO WAY due not only to Enronisation but
also to fear about inequity where lower-income populations
are concerned. At the same time, I'm a very strong proponent
of at least partial privatization in Western Europe, as EU
economies are headed toward a cliff with their overly
generous state pensions and early-retirement incentives.
We're going to follow them into Social Security insolvency by
just a couple of decades unless we do something. The trick
is: how to ensure an equitable (and palatable) inter- and
intra-generational transfer of wealth from the have-mores to
the have-lesses while permitting the economically successful
to reap the rewards of their hard work and good luck?
Regardless whether the retirement investment is sponsored
by the government, an employer or an individual, the investor
should use discretion in selecting investments. The old
investing rule of thumb still holds: conservative investors
should stick to fixed income-type investments that they are
comfortable with, while more aggressive investors may be
comfortable with mutual funds and investment trusts. The rule
of thumb is reasonable whether the source of the funds is a
government plan or a private one. Only experienced,
knowledgeable investors should put their funds into riskier
investments such as bonds or company stocks, especially
company stock of the company they work for. Employees already
have enough at risk (their paycheck and their career) in the
company for whom they work. Common sense says employees
shouldn't also put their retirement savings in the same
basket.
It's time to put that idea on the shelf -- the fact is Social Security (even though it is not officially a "pension" system) is the ONLY "guaranteed defined benefit" old age and disability security many workers in this country will ever see.
As your own News Dash notes today -- "UK workers in a
defined contribution retirement plan are likely to get
benefits that are 30% smaller (than) those in a defined
benefit program, research by KPMG Pensions shows.
Isn't it about time for some politicos to wake up and
recognize the "creative... Enron-style accounting" in the US
books is just that, and what American workers need is not
more insecurity, it is a true "guaranteed OASDI pension" that
is actuarially funded and properly invested by the government
for the people -- and then the rest of their "savings"
(remember we educate them to understand that Social Security
is only supposed to be ONE LEG of the three-legged stool for
retirement security) can be independently invested for
maximum return.
After all, just look at the bail outs already being discussed
for the Enron-style debacles -- we need Social Security for
people, not more opportunities for "welfare-insurance"
required when the next set of "creative" investments,
recommended by the government that runs such lovely deficits,
causes individual "privatized" benefit vehicles to crash!
Private investing in Tulip Bulbs is better then the Ponzi scheme run by the communists in D.C.
The idea of whether or not to privatize some portion of social security should depend on what congress is willing to do to control the use of the social security funds and achieve a higher return for the contributors. If they are not willing to address these issues, then we should be allowed to ourselves.