Are Social Security "Privitization" Schemes Unconstitutional?

[hotdog]

That is because people like Nigel spout off the same moronic crap they always do about insurance. They have NO idea what they are talking about. He stomps around shouting 'its insurance not an investment' because he thinks it makes him sound intelligent. Instead it just shows him for the fool he is.

Socail Security is investing into your country.

 

[Bonestorm]

In the case of SS, it IS an investment.

As for other insurance, you are simply misinformed on the benefits that are now available. It is not just for high net worth people looking to avoid the estate tax. Probate is not an issue as even a life insurance policy can go through probate if beneficiaries aren't named properly.

I wonder what commission SF gets on insurance sales.

Where I'm sitting we get a pretty good return on our investment in Social Security. It could be better, of course, but the program is hugely successful in achieving its goal:

 

[Good Luck]

I don't get the "SS isn't an investment plan" logic.

SS is dying. If it makes more sense to turn it into an investment plan - if it saves the gov't money, reduces the deficit and universally puts seniors in a much better position for retirement - how can you not consider it? Is it enough to just say "it's not an investment plan" and deny that it could work much better that way?

The "SS is not an investment plan" logic is not "logic" but simple truth. It is a tax and benefit system. You pay FCIA taxes which pays the SS benefits of those retirees and other beneficiaries currently in the system. Your contributions are neither held for your use later, nor do they draw any investment revenue. When you retire, the FICA tax revenues derived from others at that time will go to pay your SS benefits.

Under Reagan they started taking more than was needed in anticipation of the day when FICA revenues are not enough to pay the obligations. That portion COULD be called an investment except the funds are not treated as an investment, but as another source of general fund revenues via the U.S. T-notes.

However, claiming the SS system is not an investment (which it currently is not) does in no way imply it could not be turned into an investment. In fact, investing the funds as any decent private pension fund does is about the only way I can think of to give the SS system a permanent fix. Raising the FICA tax is a temporary fix, as has been demonstrated every time we raise the FICA ceiling and contribution levels, only to find ourselves in trouble a couple decades later.

 

[Onceler]

Oncelor, I've argued this issue on many occasions. I'd rather not re-hash the same arguments I've have ad nauseum with a person that I know is not going to change his mind about anything. If that's lazy, then, yes, it is a lazy answer.

Well, that's true of 90% of the discussion on this board. But yeah, we probably won't get anywhere by discussing further.

SS is a frustrating one for me. It's 100% fact that it will not survive to the next generation. It's not working; it's not sustainable; it eats up more of the deficit as time goes on; and seniors (which we'll all be eventually, if all goes well) will only see benefits reduced, not keep up with cost of living and eventually eliminated.

 

[Cancel 2016.2]

No, there are folks that have proposed mandatory private accounts as the social security reform of choice, including CATO, if I recall correctly. I requested that you provide me those plans of which you are aware so that I may see them. My request remains unfulfilled to date.

My point is that there are NO plans being proposed by any elected official that FORCE people to use them. That is what I asked YOU to provide. Provide the plan that YOU are bitching about.

That's a pretty strong argument you've got there. SS is an investment because you say so. Nice.

It isn't because I say so you moron.

With your home.... you buy insurance to protect against damages... you hope you never need to use it and most of us never will. We will buy insurance that is never used.

With Social Security, we are investing a portion of our paychecks into SS. We expect to draw that money (and more) out of SS over our lifetimes (or that of our spouse/bene). With the exception of single people with no kids, everyone will draw out more than they put in via the payout aspect of SS. They can do this because it is insurance that is used as an investment.

Just like a Universal life policy is designed to access the cash value of the contract for a tax free revenue stream (again, you have to use this properly or it could blow up on you.... but it too is an investment vehicle)

You can stamp your feet and cry all you want. It will not change the fact that SS is designed as an investment for retirement. It is not designed as insurance for a catastrophic event that you may not ever need.

If you don't know the difference, the perhaps you should simply shut your pie hole and try educating yourself rather than spouting off on a topic you clearly have no understanding of.

 

[Cancel 2016.2]

That's a lazy answer. The "ifs" I list are all pretty probable, and they are CERTAINLY more probable than SS being able to survive in its current form.

People can't bury their head in the sand on SS any longer. It's dying.

You see.... Nigel wants to pretend that SS is exactly today what it was when it was created in 1935. Back then it WAS purely insurance. He ignores the fact that when SS was created, the average life expectancy was 64 (63 for men). It was insurance against outliving your ability to work. That is NOT what SS is today.

Today we KNOW the vast majority of us will outlive the 62/65/66/70 start dates of SS and in most cases we will do so by 15-20 years. Between ourselves and our spouses/benes we will take out far in excess of what we put in.

SS has morphed into an investment vehicle that resembles an annuity (with the main exception being that SS is COLA adjusted)

 

[Cancel 2016.2]

Well, that's true of 90% of the discussion on this board. But yeah, we probably won't get anywhere by discussing further.

SS is a frustrating one for me. It's 100% fact that it will not survive to the next generation. It's not working; it's not sustainable; it eats up more of the deficit as time goes on; and seniors (which we'll all be eventually, if all goes well) will only see benefits reduced, not keep up with cost of living and eventually eliminated.

True, it will not make it to our generation without changes. Medicare and Medicaid are going to be a big enough burden, which is why we should address SS now so that it doesn't also add to that burden.

The solution:

1) Create the doughnut.... Start taxing employees 4% on every dollar earned over $500k

2) Privatization.... allow people the option to set up individual accounts with a portion of their money (though limit their investment options to say the Wilshire 5000 and T-bonds.)

 

[Onceler]

Beyond the fact that SS isn't sustainable as things are now, it doesn't take much to look ahead & realize that we will start to see life expectancies in the 90's and beyond before we know it. Combine that with exponential population growth, and even standard cost-of-living increases, and SS as a public program isn't just unsustainable - it's a total disaster.

And the worst part is that it's very easy to see this bigger picture now; any intelligent person can look at the situation and determine that we need to do something else. But we seem determined to wait until it becomes an Enron-style crisis (on a much bigger scale)....

 

[Onceler]

True, it will not make it to our generation without changes. Medicare and Medicaid are going to be a big enough burden, which is why we should address SS now so that it doesn't also add to that burden.

The solution:

1) Create the doughnut.... Start taxing employees 4% on every dollar earned over $500k

2) Privatization.... allow people the option to set up individual accounts with a portion of their money (though limit their investment options to say the Wilshire 5000 and T-bonds.)

Both good measures. Unfortunately, "Privatization" has become such a dirty word. I don't think it will happen, against all logic.

And I don't even agree that investments should be all that conservative. When we're talking about money contributed over 4-5 decades, I'd rather go for it, personally...

 

[Cancel 2016.2]

Both good measures. Unfortunately, "Privatization" has become such a dirty word. I don't think it will happen, against all logic.

And I don't even agree that investments should be all that conservative. When we're talking about money contributed over 4-5 decades, I'd rather go for it, personally...

I agree that the left has made privatization a dirty word. They have effectively equated it to 'you have to put all your money in the stock market' and then they point to times like 2001-2002 and 2008-09 and say 'SEE... what would your account look like if we had let you put your money in the market... we better keep control of it for you... (or rather, our buddies at JPM will keep it).

The investment options should be kept simple. Too many options confuses people. While some people could effectively manage the account with more options, having looked at what most people do with their 401k/403b's etc... just solidifies the fact that we have to keep it simple.

 

[Phantasmal]

So. let me get this straight, you don't want to contribute any longer to SS? I think that is great, I think people should be able to opt out, and do with their money what they wish, but when they have lost it all due to being stupid, I don't think there should be a personal bail out!

Those of us who wish to have to safety net, along with our 401K should be allowed to keep the option of SS, then there are those who do not have 401K's and need the government's help to save.

There are just some people who will not do it on their own, or will do it poorly, this is where the safety net of Social Security has come into play.

SF there are people who aren't as disciplined as those of us who save for our future, these are the people who need SS. These are the people who count on SS. SS is also a safety net for our country.

 

[FuzzyBunny]

There are just some people who will not do it on their own, or will do it poorly, this is where the safety net of Social Security has come into play. .

The problem started when the Safety Net became an entitlement. I have no problem with Saftey nets. I have huge problems with Entitlements.

 

[Bonestorm]

The problem started when the Safety Net became an entitlement. I have no problem with Saftey nets. I have huge problems with Entitlements.

Define "Entitlements."

 

[Cancel 2016.2]

I wonder what commission SF gets on insurance sales.

Where I'm sitting we get a pretty good return on our investment in Social Security. It could be better, of course, but the program is hugely successful in achieving its goal:

I wonder why Nigel tries to divert the topic with idiotic comments like his first sentence?

but the rest should be good.... do tell us Nigel how it is that the above POVERTY chart for different age groups shows the benefits of SS.

Please tell us you have justification for posting it... do provide us with the link to the data that shows SS is what caused the poverty rate to decline.

Side note Nigel... why don't you show the poverty rate from 1935? Does it not exist?

 

[Cancel 2016.2]

So. let me get this straight, you don't want to contribute any longer to SS? I think that is great, I think people should be able to opt out, and do with their money what they wish, but when they have lost it all due to being stupid, I don't think there should be a personal bail out!

So tell us... WHO is the above to? Who said they didn't want to contribute to SS???

Those of us who wish to have to safety net, along with our 401K should be allowed to keep the option of SS, then there are those who do not have 401K's and need the government's help to save.

Yes, HENCE the OPTION of letting the government run your account vs. you have the OPTION of investing it in a private account.

There are just some people who will not do it on their own, or will do it poorly, this is where the safety net of Social Security has come into play.

Again... with the OPTION... they will NOT HAVE TO DO IT ON THEIR OWN. They can CHOOSE to.

Saying 'they may do poorly' is quite amusing. Given the FACT that SS as it stands will not survive... the CURRENT system is the MOST risky. Which is why changes have to be made.

SF there are people who aren't as disciplined as those of us who save for our future, these are the people who need SS. These are the people who count on SS. SS is also a safety net for our country.

Again... where in the world did I say ANYTHING about removing SS?

 

[FuzzyBunny]

Define "Entitlements."

when you have a feeling your entitled to it.

 

[Bonestorm]

I wonder why Nigel tries to divert the topic with idiotic comments like his first sentence?

I wonder how much financial advisers stand to gain if, in addition to earning fees and commissions on traditional investment products they also get a cut of everyone's Social Security personal investment accounts.

but the rest should be good.... do tell us Nigel how it is that the above POVERTY chart for different age groups shows the benefits of SS.

Please tell us you have justification for posting it... do provide us with the link to the data that shows SS is what caused the poverty rate to decline.

The purpose of Social Security is to provide income to senior citizens and to insure against senior citizen poverty. Hence, the return on our investment in social security is best measure by whether it has achieved that goal. As I said, it is not by any means perfect, but Social Security has significantly decreased the poverty rate among senior citizens.

And you can feel free to post what you believe caused the dramatic decline in the senior citizen poverty rate during the relevant period if you believe it was caused by something other than the guaranteed stream of income to seniors provided by SS.

Side note Nigel... why don't you show the poverty rate from 1935? Does it not exist?

I do not have a source immediately available. If you do, please post it.

 

[Cancel 2016.2]

I wonder how much financial advisers stand to gain if, in addition to earning fees and commissions on traditional investment products they also get a cut of everyone's Social Security personal investment accounts.

The current funds are run by JP Morgan. They are run for a fee. Again you are trying to divert from the topic because you know you are wrong.

The purpose of Social Security is to provide income to senior citizens and to insure against senior citizen poverty. Hence, the return on our investment in social security is best measure by whether it has achieved that goal. As I said, it is not by any means perfect, but Social Security has significantly decreased the poverty rate among senior citizens.

Again.... SHOW us where you are getting your data. Because if you are going to compare poverty rates, you HAVE to start when SS started. OR you have to show WHY it is you think SS is the main factor in the decline.

You simply posting a chart and saying 'see it must be because of SS' is a joke. Nothing more.

 

[Bonestorm]

The current funds are run by JP Morgan. They are run for a fee. Again you are trying to divert from the topic because you know you are wrong.

Wrong about what? You personally stand to gain a great deal if in addition to non-social security funds, you also handled your clients' social security funds.

Again.... SHOW us where you are getting your data. Because if you are going to compare poverty rates, you HAVE to start when SS started. OR you have to show WHY it is you think SS is the main factor in the decline.

You simply posting a chart and saying 'see it must be because of SS' is a joke. Nothing more.

Fargle Bargle.

 

[Bonestorm]

Here's another chart. I'm sure we're seeing correlation where no causation is present:

And the conclusion of the study where I found said chart:

Applying this estimate to the change in Social Security benefits between 1967 and 2000 suggests that the increase in benefits can explain all of the 17 percentage point decline in poverty that occurred during this period. The authors also find that higher benefits lead some elderly to live independently rather than with family members, and conclude that the effect of Social Security on poverty would have been even more dramatic in the absence of these changes in living arrangements.

http://www.nber.org/aginghealth/summer04/w10466.html