Fear Of Private Social Security

#43 01-26-2005, 09:04 AM

yeah that makes sense. maybe it would be a better idea for congress to
allow just a portion of the social security tax to be privately
invested just to test its effect on the market. or even give the
option to people to invest privately. this way it wouldn't be an all
or nothing deal. they would have some sample data to test it's
effectiveness.

John A. Weeks III wrote:
- quote -

> In listening to all the talk about making social security
> private, the supporters are talking about how wonderful it
> will be to have our social security money in the market
> where it can get these fantastic average gains. I don't
> have a problem with that as long as the system will
> actually work over the long term.
> My fear is, however, that we have a limited amount of
> stock shares available. If we suddenly open the floodgates
> and pour all this social security money into the markets,
> there will not be enough shares of stock for people to
> buy. The result is that existing shares will be bid up
> as far too many people scramble to buy far too few shares
> of stock. This will result in good stocks being way
> overpriced, and bad stocks going up in value beyond what
> they are worth.
> The only benefit that I can see here is that people who
> own stock now (like myself) will be able to cash out
> at fantastic gains that we would otherwise never have a
> chance to sell at.
> Does anyone else have an opinion on this? Is there in
> fact enough stock in the stock market to absorb all the
> new social security money out there? Or would the Bush
> plan create a new stock market bubble?
> -john-
> --
================================================== ====================
> John A. Weeks III 952-432-2708
john[at]johnweeks.com
> Newave Communications
http://www.johnweeks.com

================================================== ====================

======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding.

#42 01-23-2005, 10:15 AM

John, I sincerely hope that the proposal that you mention
below is INCORRECT, or at least not being offered. It is
my opinion, that most of the programs mentioned so far
propose that a MINOR portion of the amount to be set aside
each week, month or year, (say 2% of TOTAL 14-15%) would
be placed into one or more MUTUAL FUND programs, similar
to those being currently used by Retirement Programs, EXCEPT
that they would be monitored by a governmental agency.
The balance going into the S.S. program.

THEN, there would be a "corresponding DECREASE" in the
benefit that would be received from the MAIN S.S. program,
PLUS a "payout" of some kind from that Mutual Fund Portion.
Cal Lester CLU

John A. Weeks III wrote:
- quote -

> In listening to all the talk about making social security
> private, the supporters are talking about how wonderful it
> will be to have our social security money in the market
> where it can get these fantastic average gains. I don't
> have a problem with that as long as the system will
> actually work over the long term.
> My fear is, however, that we have a limited amount of
> stock shares available. If we suddenly open the floodgates
> and pour all this social security money into the markets,
> there will not be enough shares of stock for people to
> buy. The result is that existing shares will be bid up
> as far too many people scramble to buy far too few shares
> of stock. This will result in good stocks being way
> overpriced, and bad stocks going up in value beyond what
> they are worth.
> The only benefit that I can see here is that people who
> own stock now (like myself) will be able to cash out
> at fantastic gains that we would otherwise never have a
> chance to sell at.
> Does anyone else have an opinion on this? Is there in
> fact enough stock in the stock market to absorb all the
> new social security money out there? Or would the Bush
> plan create a new stock market bubble?
> -john-

#41 01-10-2005, 11:54 PM

"Cal Lester" <cal-lester[at]comcast.net> wrote in message
news:8_6dnZMCrsrHMH_cRVn-tw[at]comcast.com...
- quote -

> Brent D. Gardner, ChFC wrote:
> > "Frank" <franksplace2[at]email.com> wrote in message
> > news:1105022235.836294.31420[at]z14g2000cwz.googlegroups.com...
> > > In my case it is a pro-poverty program. I will soon receive benefits
> > > paid in part by my kids even though I am better off than them.
> > > I have "paid the tax" for 40 + years and I am entitled to it.
> > > This is EXACTLY why the government shouldn't have entered into the
> > charity business. Entitlements cannot be curtailed, short of a
> > revolution, which is coming.
> > > Brent D. Gardner, ChFC
> > Chartered Financial Consultant
> Will we all be drinking BORSHT after the revolution????????
> Cal Lester CLU

I wish a revolution was coming, but I don't think so. 99% of Americans
don't give a . . . . .

#40 01-10-2005, 03:54 PM

Brent D. Gardner, ChFC wrote:
- quote -

> "Frank" <franksplace2[at]email.com> wrote in message
> news:1105022235.836294.31420[at]z14g2000cwz.googlegroups.com...
> > In my case it is a pro-poverty program. I will soon receive benefits
> > paid in part by my kids even though I am better off than them.
> > I have "paid the tax" for 40 + years and I am entitled to it.
> This is EXACTLY why the government shouldn't have entered into the
> charity business. Entitlements cannot be curtailed, short of a
> revolution, which is coming.
> Brent D. Gardner, ChFC
> Chartered Financial Consultant

Will we all be drinking BORSHT after the revolution????????
Cal Lester CLU

#39 01-10-2005, 09:10 AM

"Greg Hennessy" <greg.hennessy[at]tantalus.cox.net> wrote in message
news:crhqg9$j69$1[at]tantalus.no-ip.org...
- quote -

> Well, I stand by my claim it is an anti-poverty program. According to
> the 2004 trustees report, 33 million retired people are receiving
> benifits, and 7 million survivors of deceased workers. If you want to
> say SS isn't just an anti-poverty program, I can accept that, but in
> both number of persons, and amount of dollars, the "insurance" aspect
> is a minority.

You are correct in that SS is an anti-poverty program. It was never designed
to be a retirement plan for those who earned enough to save.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/
http://www.topgunproducers.com/
http://forum.topgunproducers.com/

Si vis pacem para bellum!

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

#38 01-10-2005, 09:10 AM

"Frank" <franksplace2[at]email.com> wrote in message
news:1105022235.836294.31420[at]z14g2000cwz.googlegroups.com...
- quote -

> In my case it is a pro-poverty program. I will soon receive benefits
> paid in part by my kids even though I am better off than them.
> I have "paid the tax" for 40 + years and I am entitled to it.

This is EXACTLY why the government shouldn't have entered into the charity
business. Entitlements cannot be curtailed, short of a revolution, which is
coming.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/
http://www.topgunproducers.com/
http://forum.topgunproducers.com/

Si vis pacem para bellum!

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

#37 01-10-2005, 09:09 AM

<BreadWithSpam[at]fractious.net> wrote in message
news:yob4qhvk6vp.fsf[at]panix1.panix.com...
- quote -

> However, these sentences above betray a fundamental misunderstanding
> as to what, exactly, SS *is*.
> It is *not* a savings program. It is *not* a pension program.
> It *is*: (a) a tax.
> and (b) a welfare program.
> You have *no* ownership nor rights to any of the money
> you've paid "in". There is no "in". Taxes were collected.
> It is a TAX. You don't own your income taxes or the money
> collected from your sales taxes and you don't own or have
> any right to the money you paid as SS taxes either.
> And as a welfare program, Congress has the ability to change
> the payout formulas basically at will.
> Whether that's what it *ought* to be, or what folks who use
> terms like "lockbox" try to pretend that it is, or you like
> to use terms like "paid in", are all secondary to the facts
> of what it actually is.
> Now, that says nothing about what's politically feasable
> with respect to the future of this welfare program and
> the tax system which goes along with it, but make no mistake -
> the money collected is not invested - it's paid right back
> out to beneficiaries. The system is currently running a
> surplus - it has been modified several times (mainly by
> raising the wage base on which the taxes are levied) because
> otherwise, the taxes collected would long ago have been
> inadequate to pay the benefits and the difference would have
> had to come out of general revenues (barring a benefits
> change passing in Congress). But the "trust fund" (which
> is where that accumulated surplus has been going) is NOT
> the same as the investments in a private pension.
> But the bottom line is that there is no "in". NOBODY
> has ever paid "in" to SS. They've simply *paid*. It's
> a *tax*.

Excellent post!

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/
http://www.topgunproducers.com/
http://forum.topgunproducers.com/

Si vis pacem para bellum!

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding.

#36 01-10-2005, 09:07 AM

"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote in message
news:vaTCd.68990$uM5.63633[at]bgtnsc05-news.ops.worldnet.att.net...
- quote -

> Do you not agree that insurance companies invest? Social security is an
> insurance program in addition to being a pension program. Insurance
> companies and private/public pension programs invest the money for future
> payouts. Why isn't social security managed in the same way?

There's no comparison between a commercial insurance company and the
government. Really.

There's no comparison between private pension plans and governenment safety
nets, either.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/
http://www.topgunproducers.com/
http://forum.topgunproducers.com/

Si vis pacem para bellum!

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

#35 01-06-2005, 04:02 PM

In my case it is a pro-poverty program. I will soon receive benefits
paid in part by my kids even though I am better off than them.
I have "paid the tax" for 40 + years and I am entitled to it.

Frank

#34 01-06-2005, 09:04 AM

In article <1104960413.723117.29080[at]f14g2000cwb.googlegroups.com> ,
<beliavsky[at]aol.com> wrote:
- quote -

> > I'm curious, is your income above or below the average? I wonder if
> > your feelings might be different if your financial situation were
> > different.
> It is above average, and they might be. But consider this. The 2% of my
> income that could be set aside in personal Social Security accounts
> would only be a relatively small part of my savings.

I suspect that would be true for many, for myself I save 11% in my
retirement fund, and I have a 5% match, for a total of 16%, so
obviously the 2-4% is a small point. But I wasn't expecting to need SS
to stay out of poverty.

- quote -

> For lower income people, the personal accounts could
> represent a big part of their savings at retirement, which they would
> not have in a pure pay-as-you-go system.

They wouldn't have savings, but under the pay as you go system, they
would have an income stream. I've yet to be convinced that poor people
would benifit from the changes Bush is proposing.

- quote -

> > In general, broad generalizations tend to be insulting.
> I should not have used the phrase I did. I apologize to you and other
> mifp readers.

Thank you. Speaking for my self, apology accepted.

- quote -

> > And what do you say to a retired 62 year old who paid SS taxes all of
> > their adult life, and are expecting to get the benefits promised them?
> I would say that the payroll taxes he paid were not saved but spent on
> general government activities.

But most of what he paid in payroll taxes weren't spent on general
government activities, they were spent on those people collecting
SS. Since the 70's some were spent on other things, but bonds were
issued with the intent to repay those.

- quote -

> Why I am responsible for keeping the
> promises that politicians made before I was born?

For the same reason I'm responsible keeping the government set up
before I was born.

#33 01-06-2005, 09:04 AM

Elizabeth Richardson wrote:
- quote -

> "Greg Hennessy" <greg.hennessy[at]tantalus.cox.net> wrote in message
> news:crhdse$hgu$1[at]tantalus.no-ip.org...
> > > It is an anti poverty program, that takes money from the rich (since
> > we pay SS a percentange of our wages, and high wage earners tend to
> > be rich) and give it to the poor (the SS benefit formula is
> > something like 90%
> It is not an anti-poverty program. In addition to the senior citizen
> payouts, which are independent of any savings the senior might have,
> or any assets the senior might have, there is an insurance program.
> In any household where one of the bread-winners dies, and there are
> minor children, those children receive a SS Check, regardless of
> family income.
> Elizabeth Richardson

You are BOTH correct....
SS has two seperate divisions. Retirement benefits & Survivor / Disability Insurance...
Cal

#32 01-06-2005, 09:04 AM

beliavsky[at]aol.com wrote:
- quote -

> Greg Hennessy wrote:
<<<<<SNIPED> > > > > And what do you say to a retired 62 year old who paid SS taxes all of
> > their adult life, and are expecting to get the benefits promised
> > them?
> I would say that the payroll taxes he paid were not saved but spent on
> general government activities. Why I am responsible for keeping the
> promises that politicians made before I was born? Bowing to political
> reality, Bush has said that benefits for those near retirement, which
> I have seen defined as people age 55 and up, will not be changed.

Although I personaly do not agree with the FACT that our Government
has for MANY years, "borrowed" the SS funds for other purposes, it is
still THE system in use. That 62 yr old DID fulfill his/her obligation by the
payment of the required SS taxes.
You are not personaly responsible for that debt of his/her retirement
benefit, but YOUR government IS.

Cal Lester CLU

#31 01-05-2005, 11:21 PM

- quote -

> > It is an anti poverty program,

> It is not an anti-poverty program. In addition to the senior citizen
> payouts, which are independent of any savings the senior might have, or any
> assets the senior might have, there is an insurance program. In any
> household where one of the bread-winners dies, and there are minor children,
> those children receive a SS Check, regardless of family income.

Well, I stand by my claim it is an anti-poverty program. According to
the 2004 trustees report, 33 million retired people are receiving
benifits, and 7 million survivors of deceased workers. If you want to
say SS isn't just an anti-poverty program, I can accept that, but in
both number of persons, and amount of dollars, the "insurance" aspect
is a minority.

#30 01-05-2005, 11:20 PM

beliavsky[at]aol.com wrote:

- quote -

> Greg Hennessy wrote:
> Why I am responsible for keeping the
> promises that politicians made before I was born?

This is a good question. One of the fundamental biases of our government
is that all the consequential feedback/reward/punishment that is delivered
to any politician comes from a small and biased subset of the people who
will be affected by the politician's acts. It is always rewarded and
sometimes irresistable to rob a non-voting/yet-to-be born Peter to
pay/bribe a voting Paul. There is no "Posterity Lobby".
Joe

#29 01-05-2005, 09:23 PM

Social Security is an important part of most individual's financial
security. Accordingly, possible changes thereto are an important part
of financial planning.

As mentioned by another poster, the danger in this thread is that it
tends to wander into other areas - political, personal, etc. - that
are not within the scope of this newsgroup.

The moderators are watching this and will return posts inappropriate
for general financial planning.

-HW "Skip" Weldon
Columbia, SC

#28 01-05-2005, 09:07 PM

Greg Hennessy wrote:
- quote -

> > As a 30-something, I am much less "afraid" of the opportunity to
invest
> > some of my social security taxes in a personal account than of the
> > current "pay-as-you-go" system simply evaporating under demographic
> > stress by the time I retire, especially for the "affluent".

> I'm curious, is your income above or below the average? I wonder if
> your feelings might be different if your financial situation were
> different.

It is above average, and they might be. But consider this. The 2% of my
income that could be set aside in personal Social Security accounts
would only be a relatively small part of my savings. I will have a nest
egg regardless. For lower income people, the personal accounts could
represent a big part of their savings at retirement, which they would
not have in a pure pay-as-you-go system.

- quote -

> > In general, Americas' elderly are greedy geezers who think they are
> > entitled to all sorts of goodies at my expense,

> In general, broad generalizations tend to be insulting.

I should not have used the phrase I did. I apologize to you and other
mifp readers.

- quote -

> > For decades, politicians
> > bought votes by increasing Social Security benefits in election
years.
> > I am responsible for my wife and child and our parents, not for
people
> > who did not save during their working years.

> And what do you say to a retired 62 year old who paid SS taxes all of
> their adult life, and are expecting to get the benefits promised them?

I would say that the payroll taxes he paid were not saved but spent on
general government activities. Why I am responsible for keeping the
promises that politicians made before I was born? Bowing to political
reality, Bush has said that benefits for those near retirement, which I
have seen defined as people age 55 and up, will not be changed.

A counterargument to what I have written above is that if the
government revenues lost to personal accounts are just replaced by
issuance of more government bonds, the total government liabilities
owed by future generations won't change. An important aim of partial
Social Security privatization should be restraint of government
spending, reducing the total liabilities.

#27 01-05-2005, 09:07 PM

I missed the beginning of this thread, but I TRULY enjoy
YOUR paying SS taxes. I am collecting.....
Cal

SD wrote:
- quote -

> > > I never promised anybody anything.
> > > I'm not even a citizen but SS tax is forced upon me.
> > > > Well, if you aren't a citizen, why are you here? If you don't like
> > the system, why not leave?
> > I work here. Everyone who doesnt like paying SS tax should leave? Will
> anyone be left?

#26 01-05-2005, 09:07 PM

"Greg Hennessy" <greg.hennessy[at]tantalus.cox.net> wrote in message
news:crhdse$hgu$1[at]tantalus.no-ip.org...
- quote -

> It is an anti poverty program, that takes money from the rich (since we
> pay SS a percentange of our wages, and high wage earners tend to be rich)
> and give it to the poor (the SS benefit formula is something like 90%

It is not an anti-poverty program. In addition to the senior citizen
payouts, which are independent of any savings the senior might have, or any
assets the senior might have, there is an insurance program. In any
household where one of the bread-winners dies, and there are minor children,
those children receive a SS Check, regardless of family income.

Elizabeth Richardson

#25 01-05-2005, 09:07 PM

"Rich Carreiro" <rlcarr[at]animato.arlington.ma.us> wrote in message
news:m31xczg0nq.fsf[at]animato.home.lan...

- quote -

> Because it would be a backdoor nationalization of the US economy if
> the government invested and managed SS+Medicare money in the stock
> market. I'd take the current system over any system where the
> government does the managing unless a law (or preferably a
> constitutional amendment) bars the government from voting any shares
> that it owns (and even with something like that in place I'd still be
> very wary).

Rich, that was my first reaction to the idea that Social Security be managed
like a true pension/insurance fund. Do we really want the US Govt doing
this? Then I realized that every state and most large cities are doing
exactly that. These are large funds. CalPERS is already, by its stock
ownership voting power, affecting the way business in this country is done.
I don't particularly like their politics, but I have to live with them, and
I don't even live in California. Is it possible to have an independent
management group do this? I don't know how independent they could be, but I
do know that the surplus is now being mismanaged and I don't like that
either.

Elizabeth Richardson

#24 01-05-2005, 09:07 PM

In article <crhdse$hgu$1[at]tantalus.no-ip.org> ,
greg.hennessy[at]tantalus.cox.net (Greg Hennessy) wrote:

- quote -

> In article <vaTCd.68990$uM5.63633[at]bgtnsc05-news.ops.worldnet.att.net> ,
> Elizabeth Richardson <erichktn[at]worldnet.att.net> wrote:
> > > Social security isn't about "investing" anything.
> > > Do you not agree that insurance companies invest?
> Social security isn't run by an insurance company, so it doesn't
> matter wether or not insurance companies invest.
> > Social security is an
> > insurance program in addition to being a pension program.
> Well, in insurance programs I pay the premiums, and if I don't I am
> not covered. That doesn't hold true with SS.
> > Insurance
> > companies and private/public pension programs invest the money for future
> > payouts. Why isn't social security managed in the same way?
> Because Social Security is neither an insurnace company nor a pension
> program.
> It is an anti poverty program, that takes money from the rich (since we
> pay SS a percentange of our wages, and high wage earners tend to be rich)
> and give it to the poor (the SS benefit formula is something like 90%
> of the fist 600 bucks you earn per quarter, then 30% of the next $2000
> you earn, then 15% of what you earn after that).
> Now if your argument is why wasn't SS set up as a pension program when
> it was founded, well, I wasn't alive then.

For a bit of concreteness, consider someone born 1940 who has worked
every year since 1960 and is retiring at 65 this year (half a year
before the "full retirement age" which is now slipping upwards...)

If this person paid the max. SS contribution each year, the benefit
is (by the standard SS calculator) $1835/month.

For someone paying in exactly half the max (i.e., wage income of
just under $44.000 in 2004 and correspondingly less earlier) the
benefit comes out to $1286/month, about 70% of the max. benefit.

For someone paying in at 1/5 the max each year, it's $720 (39%).

Someone in the middle group might well have other resources at
retirement; the "max" contributor almost certainly does. The guy
at the bottom of the scale probably hasn't any, and was in no
position throughout his working life to save much, if anything.

======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding.

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