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Should workers be allowed to invest in private Social Security accounts?

Asked at Hy-Vee Food & Drug Store, 3504 Clinton Parkway on January 3, 2005

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Photo of Chrissy Conner

“I think we should. The chances of me getting Social Security when I retire are pretty slim.”

Photo of Karen Cowell

“Yes, definitely. It’s my money, and I want the freedom to decide where it goes. I just want that choice.”

Photo of Ivan Lassiter

“Yes. I think they should be allowed. I don’t exactly agree with the president’s plan as someone who is approaching senior citizenship.”

Photo of Brett Horner

“If people are allowed to invest, and not touch the money until their retirement age, then it is a good way for everybody to have some control over their own financial future.”

Comments

mrcairo 10 years, 7 months ago

You already have that option. It's called savings accounts.

Richard Heckler 10 years, 7 months ago

The devil may be in the details. The financial institutions will certainly love this plan and likely made donations to the Bush campaigns. Is Social Security definitely in jeopardy? Some say it is not. What happens if people get ripped off?

Taxpayers better pay very close attention to all sides of this debate. We can only hope that the media provides such detail on the matter and lays political bias aside...hmmmm

Too many republicans want to privatize everything. What makes people think privatization is such a great thing? What research is available to prove this theory? The Kansas foster parent program is an example that not every program should be privatized.

David Ryan 10 years, 7 months ago

Republicans have been gunning for Social Security since Franklin Roosevelt's presidency, trying to destroy it. (To them, government assistance for American citizens is "communism" or "socialism" or worse. Government assistance for business, however, is sound Christian federal policy.)

Social Security a remarkably successful program that has helped millions of senior citizens live lives with more dignity and ability than they would otherwise have been able to live.

I agree that citizens need to pay great attention to this issue.

Borrowing 2 trillion dollars to bet on the stock market would be irresponsible for the head of a family; it's even more irresponsible coming from a crowd of wealthy republicans running the federal government who will never have to worry about security in their senior years.

Don't believe the current fantasy that Social Security is in crisis. It's not. President Clinton's and Congress's actions insured its solvency for many, many years out. Bush's tax cuts (which have yet to do what they were advertised for: better the economy) have put its future in jeopardy.

Liberty 10 years, 7 months ago

The current Federal Reserve system is a debt system, not a system of worth such as gold. Therefore, every "dollar" in existance is a debt, not an instrument of worth. If Congress transfers this Social Security system to individuals, it will lessen government debt and future debt. (It is then transferred to you!) That is what this is all about. It is a debt transfer scheme to individuals from government. It will allow the government to keep on borrowing more in the future, instead of living within their means like you and I would have to do. The U.S. government externalized the national debt and has mortgaged our land and resources to foreign countries and ultimately, the World Bank and foreign international bankers in exchange for more borrowing ability. This is why the Federal government has the endangered species act, to confiscate land and resources, oil, water, etc. (usually farmers land) to colateralize the U.S. government debt for international bankers. This is why we don't use our own oil, instead we use Iraq's/middle east oil to protect our collateral. If they don't properly collateralize the debt, we run the risk of having an international army like Russia and China (for the United Nations and international bankers) seize our land through repossesion for non-payment of debt. This is why the government wants to confiscate guns. So don't let your Congressman tell you that the debt that they run up doesn't matter. They just steal it from you. So think about what they have done the next time they want to give you 'money' from the U.S. government. This is why the U.S. government takes great pride in calling you, the taxpayer, because you have the responsibility for the debt that they run up.

keenbiscuit 10 years, 7 months ago

This administration has convinced a great number of people that they are accruing money in their SS accounts. They aren't. They are accruing credits that will be redeemed when they reach retirement. I know this a difficult concept for most Republicans to comprehend, but there is plenty of opportunity to save and invest in other retirement programs. SS is not a savings plan, it is more like life insurance. What do you think the insurance companies would say about people wanting to control those accounts. Figure what you are earning on your whole life insurance; it's about 1 or 2 percent. Allowing people opt out, which will reduce the amount of money available in the program for people who are already retired or approaching retirement would be a disaster.

alczervik 10 years, 7 months ago

Hey Liberty: Where do you come up with that junk, and what are your sources for your conspiratorial rants? I'm very curious to know where you new world order fearing types get your info. Thanks.

Bad_Brad 10 years, 7 months ago

The problem with Social Security as it stands today is that it is only a sustainable system as long as we have a stable or rising birth rate, as well as stable or declining life expectancy. Unfortunately, we have neither. Our birth rate has been flat or declining for at least a couple of decades now, and our life expectancy is going up. What does it all mean? In the absence of any changes to the current structure, it means more people collecting Social Security benefits and less people paying into the system. That is only sustainable in the short-term. In the long-term, especially when the abnormally large Baby Boom generation retires, the system as it stands today cannot continue to exist.

The root of the problem is that Social Security is viewed by Americans today as a retirement plan. It was never intended to be that! It was intended to be a safety net for the truly destitute who had outlived their ability to pay their own way. Today, it is seen as a government-funded defined-benefit retirement plan. It needs to get back to its original intent. Two ways to do this:

  1. Index increases in Social Security to general inflation, not increases in wages (in a growing economy, wages always rise faster than inflation)

  2. Increase the retirement age proporionately with increases in life expectancy

Those two changes would make the current sytem work fine. The idea of private accounts is an intriguing one, but there are so many moral hazard issues with that idea that it frightens me. Besides, if I want to invest my money in private retirement accounts, I can already do so via a 401(k), IRA, or other retirement plan. As much as I dislike the fundamental structure of the Social Security program (i.e. government mandated Ponzi Scheme), it has been in place for close to 70 years now, and there is too much inertia to make sweeping changes to it all at once. The system is what it is. But it does need to be tweaked or else it won't be viable in the long-term. The two changes I mentioned above should take care of it.

donsalsbury 10 years, 7 months ago

This is how social security should have been set up to begin with, if it needed to be set up at all.

I'm against federal government entitlements for citizens, corporations, and (especially) politicians. Since the parties are so keen on setting up the wealthy for elected positions, there should be no salary for elected officials. Maybe $20K stipend per year for federal legislators for travel to and from your district to DC (perhaps even a sliding scale based on state geographic area and distance from DC). That's about it. We pay so much for the president to fly around anyway, and he's basically guaranteed a book deal (or 5) when he's out of office. If he is (for once) actually a normal human making under $100K as a household (no deductions allowed), then make up the difference. That would be an incentive for 'poor' people to run. Enough of the battle of the millionaires.

remember_username 10 years, 7 months ago

I have been paying into social security for over 30 years under the belief (perpetuated by the system) that home ownership, personal savings, medicare, and social security would support me after retirement and that I would not have to be a burden on others. I have only recently acknowledged that I will get much less than I hoped for and with the inevitable collapse of the system perhaps none at all. I believe that the current Bush plan to divert funds into another IRA will only hasten that collapse - but collapse it will, without government (read taxpayer) augmentation.

The best solution to this thing is one that will anger all. Use the current republican plan to transition from government support to private. In the mean time raise the retirement age, slowly so as not to harshly disrupt the current-and-soon-to-retire plans for the their future. But then stop it with all the tax cuts and use government augmentation to supplement the system until the transition is complete, this way the baby boomers will not feel as if their government is deserting them. This would mean we would all sacrifice something but we would get by while getting along politically.

Jay_Z 10 years, 7 months ago

Bad Brad, good analysis.

Liberty, quite smoking that funky stuff! Did you get those whacked out ideas from Michael Moore?

The Social Security system should be fazed out...it is absolutely corrupt and not sustainable. We should not rely on the government to certain programs for us. Government is mostly inefficient and ineffective at running these programs. Don't you want to control your own life, rather than relying (more like hoping) the government acts in your best interests?

lunacydetector 10 years, 7 months ago

i read one study that said most retirees are collecting social security that they never paid into the system when they were working. that it takes only 5-6 years for retirees to collect all of the funds they had paid in. so the young ones are making up for the old folks longevity.

since the younger population is decreasing, that's what you get! just like the democratic party is dying due to decreasing population - something they promote - decreasing the population!

ha, ha.

Punkin 10 years, 7 months ago

Exerpt from In These Times:

Tell people that they have been lied to about Social Security!

The program is unambiguously healthy. The Social Security trustees' report (available on the Social Security Administration's Web site) shows that the program can pay every penny of benefits through the year 2042, with no changes whatsoever.

Even after 2042, the trustees' projections show that while the program won't have enough to pay currently scheduled benefits-which are approximately 40 percent higher than current benefits-it will still have enough money to pay benefits higher than those that current retirees receive, even when indexed for inflation. The changes necessary to allow full scheduled benefits to be paid throughout Social Security's 75-year planning period are smaller than the changes to Social Security-increased Social Security taxes and benefit cuts-that were made in each of the decades from the '50s through the '80s.

Last June, the nonpartisan Congressional Budget Office (CBO) made an independent assessment of Social Security's finances and concluded that the program could pay all benefits even longer-until 2052-with no changes whatsoever. According to the CBO, the changes needed to keep the program fully funded through its 75-year planning period are less than half as large as the Social Security tax increases put in place in the '80s.

Just to be clear, neither of these projections is based on a rosy scenario about the future. In fact, the Social Security trustees assume that over the next 75 years the economy will experience the slowest pace of productivity growth in its history-there's no "new economy" in this story.

In short, the claims that Social Security is in imminent danger of bankruptcy are just like the claims about Saddam Hussein's weapons of mass destruction-politically motivated lies.

Bad_Brad 10 years, 7 months ago

Punkin - you would do well to realize (as would the writers of the periodical that you quoted) that both the Social Security trustees and the CBO have a vested interest in keeping Social Security exactly as it is.

The fact of the matter is that any analysis of future Social Security liabilities is very sensitive to a number of critical assumptions: wage growth, mortality rates, birth rates, unemployment rates, etc. Any actuary will tell you this. If you tweak any one of these assumptions ever so slightly, instead of the system going belly-up around 2020, the system suddenly looks perfectly fine until 2052. Voila! Smoke and mirrors.

Any reasonable set of assumptions about these things has the ratio of people paying into the system to the number of people receiving benefits continuing to decline well into this century. This is not sustainable unless changes are made to the structure of the system. I don't think Bush's proposed changes are necessary, but I do think that the rate of increase in benefits needs to be scaled back (from wage growth to general inflation) and the age at which you start receiving benefits needs to be indexed according to changes in life expectancy.

unknownphotog 10 years, 7 months ago

privitzing SS is all about linking SS to the stock market. linking SS to the stock market removes the obsacle of environmental respoonsibility. companies will no longer have to adhere to environmental laws because polluting less costs money, and since added costs diminish the bottom line, stock prices go down. linking your SS account and financial future/wellbeing to the stock market will give corporations a green light to disregard any and all environmental law, because if it's bad for the company, it will be bad for your SS account. read all about it at this link www.harpers.org/TrillionDollarHustle....

Jay_Z 10 years, 7 months ago

So privatizing social security will doom the environment and encourage pollution. HAHAHAHA Wow, I think I've heard it all now, you libs are a peice of work.

Punkin, use some common sense...a big generation of baby boomers getting ready to retire will eat up a lot of the social security benefits accrued. It is a fact that more people are now enjoying the benefits of social security and that even fewer people are now paying money into the social security system. Logically putting these things together will tell you the system will eventually run dry.

No one has answered this: why do you want the government to decide what you do with your retirement? Wouldn't you rather control the money yourself? Or would that pollute the environment?

Bud Fuller 10 years, 7 months ago

Sounds good on the surface, but need more details. Now on a 401k they made what I call a mistake by letting people borrow against their 401. Then what if the economy is in a down swing when retirement rolls around can you defer withdrawing the 401k part and only draw on the current portion of SSA contributions? What about fees, sounds like someone will get rich on this deal.

ms_canada 10 years, 7 months ago

Interesting topic today and one to which I am not qualified to comment. Never the less, I have a comment. from my American sister I learned that you do not receive SS unless you have paid into it. Is that correct? we have something similar here in Canada which is called Canada Pension Plan (CPP) This fund is contributed to by both employer and employee. The monthly payments collected by a retiree can begin at age 60 or deferred to no later than 70. Now then, I don't think you people have what we have and it is called Old Age Security. This you do not pay into and every single person receives this monthly payment upon reaching the age of 65, no matter if you ever worked a day in your life in Canada. The monthly CPP payment is dependant upon contributions during the working years. This pension business is all handled by our federal government, no private insurance involved. Now some of you may bring up the fact that we Canucks pay way more taxes that you yanks. We like it that way. Also, there is nothing stopping anyone from arranging further retirement funding privately. If a person did not work at good paying positions during their life you can see that they would not receive too large a CPP payment, but for Old Age Security, there is also something called a Suppliment that one can apply for and receive if income is low enough. I don't know if this contributes anything to the discussion of today. Sometimes it really strikes me how different our two countries are. I can tell you that I certainly do have a good sense of security knowing that I will be provided for in my old age, plus all the medical benefits that our seniors receive. Read one of my past posts to see about that. Bye bye. ciao

badger 10 years, 7 months ago

Social Security is supposed to keep you off the streets, that's all. It's supposed to provide a starvation pension if you didn't save anything, so you're not out there at age 85 panhandling and eating out of garbage cans.

It was never supposed to be the sum total of your retirement, and I don't really understand exactly how people got that idea. Perhaps when SS became a playing card in election politics, with both sides playing up whatever the other side had done lately that didn't mean, "We're going to take money away from everyone else and give it to the nice old people who vote in every election, even the ones no one else cares about!"

Politicians play up the collapse of Social Security as if it will dramatically affect the survival of every single person over 65, as if they have nothing else to live on. They should, by now, know that Social Security is enough to pay for an efficiency apartment and cheap food, and if they want to have any sort of retirement, they need to do it themselves already.

If you want to 'take control of your investment future' then do it. A quick look at a paycheck shows that what's being taken out for Social Security is pretty minimal in the face of all the other deductions, and that it's significantly less than I'm able to take out for my own retirement and pension plan--which I do, thus 'taking control of my future' and not requiring privatization by an administration that's not really engendered a great deal of confidence in itself when it comes to ethical and fair distribution of government contracts to private industry.

When people cry to me how Social Security isn't enough to retire on, I say, "It was never supposed to be. It's supposed to be enough to keep you from starving." I don't believe that we as a nation will let SS die without putting something else into place to try to keep old people from dying of malnutrition and exposure in unheated apartments with socks on their hands. It's not how we work, so using that spectre to insist on dramatic reconstruction of government arrangement and spending that's not being very well explained shouldn't work as well as it does.

Before we totally rearrange Social Security, what I'd really like to see answered is this: Of the people with available retirement contribution options other than Social Security, what percentage of those people really save the maximum available to them? Of all those people who already have the options to privatize their own retirement, how many are doing it? Because having talked to people my age (I'm in my 30s), I find that an awful lot of them are choosing to keep that 20-50 bucks a paycheck, instead of funneling it to the 401k (or whatever)--and I don't really have a whole lot of reason to believe that privatized Social Security would cause them to think any further forward than they do right now.

unknownphotog 10 years, 7 months ago

since Jay Z is too lazy to check things out on his/her own, i'm offering this up for him/her (and by the way JZ, i voted for W):

An even shinier reward also looms just over the privatization horizon. The Social Security reformers profess concern over the politicization of markets, but what they have in mind might be described as the marketization of our politics, the coronation of Wall Street as the nation's protector and benefactor. What the stock market has clearly failed to do on its own-establish itself as the reliable friend of the small investor and establish its political agenda as that of the common people-the commission now proposes to do by law. With our Social Security money entrusted to Wall Street, its priorities will become the nation's priorities; its demands for deregulation, de-unionization, low wages, and generous "stimulus" packages whenever the Dow looks a little weak will be recast as the demands of little old ladies in Beardstown and blue-collar workers in Providence. Who would dare to legislate for higher minimum wages, say, or stricter protections for arctic wildlife, when such a move could be construed as an attack on the nation's beloved retirees? Although we can only glimpse the possibilities now, this mind-boggling reconfiguration of economic politics is the real promise of privatization, the thing that makes it worth the insane gamble: instantly, privatization would reverse the polarity of the famous "third rail of American politics," transforming Social Security from the bane of the business community into its most potent weapon, an argument-ending current that would crackle through the fingers of every P.R. man and corporate lobbyist. Touch Wall Street and you're dead.

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