Cynical Nation

That WOULD be a disaster, Barry.

Short of the scuttled partial privatization, which would've (1) kept the system solvent in perpituity and (2) would've increased payouts to those workers young enough to have opted to move that 1% into private annuities, there is ONLY ONE possible way to save social security...and it's NOT by increasing the FICA tax.

No, the obvious route is by (1) increasing the retirement age (to 72 now and 75 within five years) and (2) reducing benefits (by only five to ten percent).

When social security started the life expectancy for the average American was 66 years (thus the retirement age of 65).

Today's avarage life expectancy is closer to 76, and people are living not only longer, but healthier lives, so why not a 75 year retirement age?

A red-letter day! I agree (somehwat) with JMK! Of course raise the retirement age and cut or eliminate benefits (for people who don't need Soc Sec., like my millionaire boss). A third thing would be to raise or eliminate the income ceiling for Soc Sec taxes.

A red-letter day! I agree (somehwat) with JMK! Of course raise the retirement age and cut or eliminate benefits (for people who don't need Soc Sec., like my millionaire boss). A third thing to do would be to raise or eliminate the income ceiling for Soc Sec tax witholding.

> A third thing to do would be to raise or eliminate the income ceiling for Soc Sec tax witholding.

That seems to be the crux of the new plan, from what I'm hearing.

Good.

Not.

"A third thing to do would be to raise or eliminate the income ceiling for Soc Sec tax witholding." (Fred)
"A third thing to do would be to raise or eliminate the income ceiling for Soc Sec tax witholding." (Fred)


WoW! A REAL bad idea!

Social Security is not a welfare/social (wealth transfer) program...and I'm merely assuming I'd be preaching to the proverbial choir in denouncing any form of "wealth transfer" program here, as I merely presume we all know why they're so terrible for both the looted and the beneficiaries alike.

Social security, as it stands, is a system based on how much each recipient pays into that fund.

I've worked and paid into it my entire life, so my benefits are higher than someone who's worked part-time or has some rather large employment gaps in their work history.

It's not designed to be primarily a "wealth transfer" program and that's why (1) payouts to workers who've paid more in, are higher, (2) why the FICA tax is capped at around $100 K/year and (3)why even people who get generous pensions, etc. still get their "earned benefits."

I'd much rather see it made into an even more "pay as you go" system, as I KNOW, I'm not guessing, I KNOW that it would not drastically impact those earning less, much more than the current system does.

In NYC, both firefighter's and police can get "disability pensions," for any number of ailments - most forms of cancer, lung ailments, heart problems, etc., not to mention actual traumatic on-the-job injuries are all presumed to be "job related." Those disability pensions deliver THREE QUARTERS of your SALARY TAX FREE...and most of those recipients get SSI as well.

I would instead support this idea Fred, as a half measure - for all those who your idea would deny benefits, they'd get all their contributions back at a very low interest rate (say 2.5% to 3%/year), on the grounds that they should not be forced to contribute to a retirement plan that doesn't benefit themselves.

The other alternative would be to claim that social security is no longer a retirement plan (despite its retirement age), but a wealth transfer program. Of course, in that case, I'd support the abolition of that entire program on the grounds that we already have welfare, WIC and other such "wealth transfer programs" in existence and we simply don't need any more.

Not only that, but raising/eliminating the income cap would do little to address long-term solvency, as the FICA formula links contributions with benefits. People may not currently pay payroll taxes over $100,000, but they won't receive benefits based on that money either. Futzing around with the cap will do nothing other than hasten SS's complete transformation into an out-and-out welfare program, as you point out.

good points. I'm trying to come up with a counter-argument or something, but I gotta go eat something first.

The basic question is, "Do we really want to make social security a welfare program?"

Sure, one could cynically argue, "Why not, SSI already clearly is."

But that's not an argument in defense of social security, as much as it's an argument in favor of despair.

Wealth transfer programs are (1) geared to transfer INCOME generated wealth from high wage earners to low wage earners, as the current tax system excludes the "truly wealthy" (those who do NOT depend upon income for their wealth) and (2) mire recipients in poverty by making it harder for those people to take entry level jobs that barely pay more than the sum value of their benefits.

As it is currently constituted, social security is an ill-conceived ponzi scheme that worked well in the days when there were 16 workers for every recipient, but is doomed to failure as Baby Bommers retire and leave only 3 workers pitching in for every retiree.

Social security SHOULD have been "privatized" via personalized accounts linked to the stock market via mutual funds, a long time ago. There's never been a good reason not to.

Those who assail the stock market invariably don't understand the stock market.

Count me in the "just leave it alone" camp. Guaranteed, they will just screw it up worse.

At least once the Boomers retire and the surplus runs out, they will have to cut Federal spending.

What am I thinking, they will just raise taxes instead.

The 20 ton elephant in the room that noone is talking about with regard to Social Security benefits is disability benefits. Those benefits are payable as JMK mentioned based upon the number of years that are put into the system – but they are also payable to widowed spouses as well as disabled children. So while I agree that we shouldn’t make it into a wealth transfer system for those who haven’t paid into it, we should acknowledge that it’s not strictly one to one. If you have a family with 3 kids and one wage earner, and 1 of his kids is disabled, and he retires then you have two people receiving the benefit based on one worker’s contributions to the system.These disabled children are also eligible for Medicare as well which they’ve never contributed to either.

Now while you might not agree with this, it is the way it’s done right now according to law. I have a disabled family member, my sister. She gets a rent credit from social security and a small amount of cash for expenses. She also receives medicare benefits. She doesn’t lead a lavish life by any means, she wants to work and have a career, but honestly she has no real conception of what that means, and the reality is that she has tried to get hired and can’t. Even if she did get hired if she makes too much money she loses her social security benefit, of course the amount defined as too much is not enough to pay rent or pay for basic living expenses.

So she volunteers at the local hospital which she walks too since she can’t drive herself. That’s her way of contributing. She did have one other menial job that she got through a state program. She was a maid. A van picked her up at 4 am and drove her to a local office complex where she emptied trash along with immigrants who for all I know were illegals, and she wasn’t able to keep that job since she wasn’t doing it well enough (part of her handicap is physical).

When she needs medical care she has to go to a clinic filled with mostly Hispanics, I have nothing against them but something tells me that since they speak no English they haven’t paid into the system either.

This is obviously a personal issue for me because I know the real life impact. I’m not happy with the system, I know there could be lots of reforms, but it needs to exist. I do well enough for myself however I’m unable to support my sister. She doesn’t want to live off the system, but it’s the only viable option. There should be a program that lets her work and make as much as she can in the private sector to offset the cost to social security, but there’s isn’t one. So she has no real choice. Even less if I wasn’t here or my father wasn’t.

I’m all for cleaning up the system but there are real reasons that benefits are sometimes paid out to people who were born in this country, that didn’t contribute that aren’t as fortunate as me or you. I don’t believe in a wealth transfer system, I just believe in helping those who really need it.

The other comment I have is regarding the special disability pensions available to police and firefighters. Why may I ask do you think they are only available to police and fire fighters? Why not to the rest of us? After all those programs are funded by tax dollars. Why does my friend the cop get a special mortgage rate and program that allows him to buy a house that he couldn’t if he made the same salary as a salesman? Because it’s government funded.
Now I understand the argument that these guys are doing dangerous work and it’s a form of payback for doing the job. That’s great and all but honestly noone is making them do the job. In fact many guys I know want to or have become cops simply because of these perks. I know it may be unpopular to say but as much as I thank the fireman for coming to my house when it’s burning, or the cop for being there if someone I robbing my house I’m just as thankful for the teacher teaching my kids, or the electrician that fixes my lights, or the mechanic who gets my car working …or even the accountant who prepares my taxes. All jobs are valid or else they wouldn’t receive a paycheck. The difference is that in the private sector a company has to keep the bottom line in mind at all times or else the company goes away and so does the job. In the private sector that’s not a problem, there’s no bottom line in fighting a fire, so there’s no concept of profitability. Hence you get these outlandish benefits programs funded by the taxpayer that the very same taxpayer has no access to unless they are in a specific profession.

Kind of sounds like social security except in this case we all pay into it but only a select few reap the rewards. Same goes for any government funded pension – pensions in the private sector are almost archaic concepts.

I agree that we shouldn’t create a wealth redistribution program, however there are needs to fund social security and medicare beyond the one to one scenario, one that I haven’t even mentioned is the fact that the withholdings from our pay does not go into a bank account, it goes into the hands of the current retirees, which isn’t one to one either and is a reason why the concept of private accounts wasn’t ever a workable one. The real effect of private accounts would have been to pull the entire amount of the “trust fund” out of the governments pocket and throw it into the investment community (which was the real motivation – do you have any idea of the salivating there was to be had at the thought of such a large injection of speculative capital?). The current beneficiaries of social security would still have to be paid somehow…and there are basically two ways for the government to get more money, tax or borrow. So you’d have had even more added to the deficit because you can be sure Bush would not have raised taxes.

For all the fun had at Al Gore’s expense he had it right when he talked about the Trust Fund and a lock box. He communicated it poorly but he was right.

There's one of the major problems with the social security system as it now exists - too many people who've never contributed to the system getting benefits.

SSI has been used as a scam for years...decades. Those scammers damage and undermine the program your sister relies upon.

Before the advent of the U.S. welfare system, America held to the concept of the "desrving" and "undeserving poor."

The "deserving poor" were those who were legitmately disabled, mentally, emotionally or severly physically handicapped and those who happened upon "hard times" but sought to get back to work ASAP.

The "undeserving poor" were those who didn't want work or job training and those who "contributed to their own impoverishment by means of personal debasment" (excessive drinking, etc).

Sadly that tried and true Americanism was one of the things undermined by the modern welfare state.

Social service bureaucrats quickly saw no advantage in getting the poor back to being contributing members of society, hell, that strategy could easily put them out of a job.

Your sister is receiving SSI, correct?

That has long been a disability program, for people either born, or left by means of accident, impaired. That is slightly different than traditional social security and should remain a separate program and possibly one managed outside the social security administration.

For those who CAN'T work through serious disability, I believe there should be something along the lines of SSI, while for those unable to work due to a lack of skills, or via reckless and impulsive actions (the chronic poor), I believe that they should be assisted via some sort of welfare bureaucracy with a fixed time limit (say five years), mandated job training, some interim "workfare-type" system and mandated birth control while on that public assistance.

As for those disability pensions - not every Police Dept or Fire Dept has them. I know NYC's does and the city loves it because as opposed to regular pensions paid by both the City and the members into a pension superfund, the disability members are paid a portion from that fund, a portion from the State and another portion form the Feds.

Another thing that NYC allows both Police & Fire officers to do is to retire with their final year's salary, overtime included, so if firefighter X's base salary is $82,000/year with night differential, Holiday pay, uniform allowance, etc, etc and he works 500 hours of OT at appx $50/hour, he'll retire at $107,000, rather than that $82K.

That's the "deal" the City of NY negotiated with the PBA & UFA over the years, now protected by both the City Council and the State Legislator.

None of it makes any fiscal sense, any more than allowing in 11 million illegal aliens to take jobs that the "able bodied" and "deserving" American poor SHOULD be doing. Such policies are fiscal calamities.

As expected, disability pensions are much tougher for firefighters and police officers to get, a little easier for "Line officers" (Seargents, Lieutenants, Captains, etc) and much easier for "Senior Supervisors" (Inspectors and Chief Officers) to get. In fact, ironically enough, virtually every physician who works in the City's Medical Offices gets 3/4s or "3 Qs," as it's commonly called, as a perk.

Al Gore did not so much espouse a "lock box," as erroneously implied there was one.

"The real effect of private accounts would have been to pull the entire amount of the “trust fund” out of the governments pocket and throw it into the investment community (which was the real motivation – do you have any idea of the salivating there was to be had at the thought of such a large injection of speculative capital?). The current beneficiaries of social security would still have to be paid somehow…and there are basically two ways for the government to get more money, tax or borrow. So you’d have had even more added to the deficit because you can be sure Bush would not have raised taxes." (GZ)
Social Security Reform, with Interest

Doing Jim DeMint’s proposal one better.

By Phil Kerpen
http://www.nationalreview.com/nrof_comment/kerpen200506280918.asp

An article last week on NRO referred to me as a critic of Sen. Jim DeMint’s proposed Social Security legislation. I am not. In fact I think DeMint should be praised from the highest rooftops for his leadership on the issue. As Larry Hunter and I made clear in a recent guest comment on this site, stopping Congress from raiding the Social Security surpluses and instead dedicating those surpluses to personal accounts — as DeMint proposes — is the best possible compromise in the current political environment.

Yet as great as the DeMint plan is, it could be better. The most significant step that could be taken to improve the bill would be to dedicate interest from the Social Security trust fund, along with the cash surplus, to personal accounts, as DeMint himself would prefer to do. Including the interest would not, as some have alleged, increase the deficit or the national debt.

The interest is already scheduled to be paid to the Social Security trust fund. Paying that interest by issuing bonds to personal accounts simply means moving some debt from the intergovernmental column to the held-by-the-public column. If we take seriously the obligation to pay benefits to future retirees — and almost everyone does — then the debt in the trust fund is every bit as real as the debt held by the public. From Congress’s perspective, the debt that’s subject to the statutory debt ceiling, which includes intergovernmental debt as well as debt held by the public, would be unchanged.

One potential roadblock to including the interest in a reform package is that the bureaucrats who calculate annual deficits, by convention, include the issuance of marketable bonds as outlays that would increase the deficit. (The bonds in the accounts would be real, marketable bonds — not the “special issue,” unmarketable IOUs in the trust fund.) But in this case that convention makes no sense. The bonds, in being marketable, do not cost the government anything. When people sell the bonds they will be paid for by whoever buys them — not the government.

The interest would also increase the size of personal accounts dramatically. In fact, adding in the interest is the difference between having very modest accounts that peak at only 1.8 percent of payroll and having full 4 percent accounts. Four percent accounts happen to be the size preferred by President Bush, and would be a significant step toward more fundamental reform. As the table below shows, over the next ten years this difference would mean real money to the 160 million or so workers paying Social Security taxes.

All of this comes back to the duplicity surrounding the trust fund. The people who raise the cost objection pretend that making interest payments to the current trust fund doesn’t cost anything while paying that same interest into personal accounts would. This is the same double-speak that tells us the trust fund is real when Social Security’s so-called solvency is being projected, and fictional when it comes to the federal budget and Congress’s desire to spend the surplus. Ending this duplicity is one of the primary goals of Sen. DeMint’s admirable legislative proposal, which is why I offer this friendly suggestion: Give workers back the surpluses, with interest.

— Phil Kerpen is policy director for the Free Enterprise Fund.

If having a dangerous job is the yardstick for pension size, then farmers, cab drivers, party store clerks, and construction workers deserve the premium package.
I suspect that before the boomers reach 65, the retirement age will be raised to 70. Five years later it will be 75. After that- soylent green.

The problem with Social Security now is that it is neither fish nor fowl.

The program was initially supposed to be a mandatory insurance plan -- based on the premise, BTW, that hardly anyone would live to collect more than a few payments.

Regardless of how the program is now operated (there is, at least, a pretense of actuarial legitimacy) it is viewed as an entitlement program by most of its beneficiaries.

Probably, we need two seperate programs: A mandatory thrift -- You are hereby ordered to save 10% of your gross income, regardless of how much you make -- and a simple tax-and-entitlement program for the poor and disadvantaged.

I don't like either mechanism, but it's obvious that politics precludes a rational alternative.

JMK - Yes my sister receives SSI, and I’m glad you see the difference and why in her case it’s necessary. That’s all I’m ever really arguing for when this subject comes up, that her and others like her need these programs in order to get by. It would be even better if it was part of a separate system, but for now it’s part of the Social Security system and that’s how it’s funded.

For that reason alone I think it’s flawed to look at it as a 1 to 1 system where you only get back what you paid in. Since the program is setup to allow people like my sister to draw from it without making a contribution the money has to come from somewhere.

I’m not opposed to reforming the system, but we have to be very careful when doing so. I seldom here mention of what the plan is for people like my sister whenever the subject of reform comes up. Partially because a lot of people who talk on this issue don’t even realize that cases like hers exist, because it’s never mentioned in the debate.

As to the pensions you spoke of I’m also glad you see them as fiscally irresponsible. Especially the fact that overtime hours are paid out as well. The mere fact that those pensions exist at all is inherently unfair. The only reason they exist is because they are part of the government bureaucracy to begin with. As far as I’m concerned if the government wants to give pensions (at taxpayer expense) to government workers, then they ought to mandate them for the rest of us as well. Look at it this way, even if they were to give tax concessions to businesses to compensate them, it’s the same thing as paying for them directly – which is what they do for any government agency.

As to Al Gore and lockboxes, I’m not going to open up that debate again. We both know what he meant by the lockbox, the Treasury notes. The “lock box” didn’t mean the cash was locked in a vault. It meant it was guaranteed by those notes. In the same way that the money you use to buy a Treasury note, or a stock, or even the money placed in your savings account isn’t locked in a vault. When you place your money into any instrument, even an instrument as simple as a savings account, you are giving the wielder of that instrument the authority to use your money to further their investments. That’s how a bank makes money, it’s how they’re able to pay out interest. It’s why the term “a run on the bank” exists – because if everyone demanded their money back all at once the bank couldn’t do it. Hence the establishment of FDIC. But I’m sure you know all of that as well. My point is I don’t think Al Gore ever meant to imply that the money was physically locked up, only that it was guaranteed by the Treasury Notes. A concept that Bush rather than actually discussing sidestepped by making a joke out of the term “lock box”. A running tactic with the president on numerous issues as anyone can see.

GZ, though we may disagree on the size and scope of government, we agree that some basic safety net must exist.

The problem with all such programs is that such safety nets become magnets for scammers and frauds.

SSI has certainly been abused and to the detriment of deserving people like your sister, like people blinded in work-related accidents, etc.

Now regular social security should remain a non-wealth transfer program, at least as much as is possible. Yes, a recipient who lives to 100, is probably going to take far more from the system then was put in, while others, who don't live very long will pay more in then they get out.

Should social security monies be kept separate?

Of course, I'd say yes, but you and I understand, I'm sure, that government tends to run off all the monies it has streaming in.

That's why privatization would be preferable, in my view, as that money would have to be accounted for and invested in specific accounts.

I suppose that's why the current President only targeted allowing a paltry 1% of a person's contributions be able to be privatized.

As for NYC's generous pensiuon program, New York, like many, if not most Blue States has a history of fiscal recklessness and irresponsibility.

Now the Police and Fire Departments have traditionally paid less than Construction work and other comparative private sector fields, with the trade off being better benefits. I routinely made more "on the side" than I did with the FDNY, but I loved the work and I liked, even needed the benefits (health, dental, etc), including that pension package.

To be fair, we pay into our pensions, in fact I've put in a "surplus" of funds that I'll eventually be able to take either as a lump sum or as an annuity.

Now, I don't know why the city negotiated OT being pensionable...dumb move on their parts, but much harder to undue, but all such things were once negotiated in lieu of pay increases.
GZ, though we may disagree on the size and scope of government, we agree that some basic safety net must exist.

The problem with all such programs is that such safety nets become magnets for scammers and frauds.

SSI has certainly been abused and to the detriment of deserving people like your sister, like people blinded in work-related accidents, etc.

Now regular social security should remain a non-wealth transfer program, at least as much as is possible. Yes, a recipient who lives to 100, is probably going to take far more from the system then was put in, while others, who don't live very long will pay more in then they get out.

Should social security monies be kept separate?

Of course, I'd say yes, but you and I understand, I'm sure, that government tends to run off all the monies it has streaming in.

That's why privatization would be preferable, in my view, as that money would have to be accounted for and invested in specific accounts.

I suppose that's why the current President only targeted allowing a paltry 1% of a person's contributions be able to be privatized.

As for NYC's generous pensiuon program, New York, like many, if not most Blue States has a history of fiscal recklessness and irresponsibility.

Now the Police and Fire Departments have traditionally paid less than Construction work and other comparative private sector fields, with the trade off being better benefits. I routinely made more "on the side" than I did with the FDNY, but I loved the work and I liked, even needed the benefits (health, dental, etc), including that pension package.

To be fair, we pay into our pensions, in fact I've put in a "surplus" of funds that I'll eventually be able to take either as a lump sum or as an annuity.

Now, I don't know why the city negotiated OT being pensionable...dumb move on their parts, but much harder to undue, but all such things were once negotiated in lieu of pay increases.


Paul, I don't believe those disability pensions are given for the mere fact that policing and firefighting are "dangerous," as other Municipalities don't have them.

I do know this, certainly the City gets over on the FDNY on pensions as the average life expectancy for firefighters is something like 58 years of age.

Still, you don't see this in many Southern or Western states. NYC is far more generous with its municipal workers than most other places are...and with their politicians as well.

Wait a sec, was I asleep last year??? One percent of SS contributions would be allowed to be privatized under Bushie's proposal? I just looked at my check, and that'd come out to about $50 or $60 a year...Why even bother?

Fred, I'm pretty sure the sum was just 1%. I'll have to look that up and confirm it.

That's why it was said that only the very young would have an incentive to move that portion of their contributions.

For those over 40, it probably wouldn't have been worth it...unless of course, you worked and contributed to social security til you were 75 and lived to 105.

I wouldn't mind raising the arbitrary ceiling on the FICA wage base. They could restrict the benefits for those with higher incomes, much like they do today. If this is viewed as "wealth transfer", it doesn't bother me so long as the SS benefits that the less priveleged receive don't make them wealthy, but just keeps them out of poverty.

Of course, the real solution would be for everyone to save properly for their own retirements, and for the economy to function such that no one lives in poverty. This would mean that everyone would need to be bright, hard-working, healthy and have access to affordable insurance and health care. Of course, this will not happen in my lifetime. This is why I'm a pragmatist (Democrat) an not a idealist (Republican, along with some Libertarians).

My point about "dangerous jobs" was that government workers at all levels enjoy better pensions, benefits, and legal protections than comparable workers in the private sector. I was pointing out that cops and firefighters don't have the most dangerous jobs, but they are treated as a special class of citizen. Where's the tomb of the unknown carpenter? The televised parade for the fallen liqour store owner?
This was brought home to me right after 9/11, when the media hastened to assure us that our government was STILL SAFE!
I thought: "Thank God! We can all sleep better now."

You listen to different rumormongers than I do. What I'm hearing is that Bush will re-introduce his privatization plan after the start of the new year -- Democratic Congress be damned.

> Of course, the real solution would be for everyone to save properly for their own retirements...

I could perhaps swallow raising the cap as part of a deal that included private accounts, but apparently that's not even on the table.

> This is why I'm a pragmatist (Democrat) an not a idealist (Republican, along with some Libertarians).

You can't be serious.

"Of course, the real solution would be for everyone to save properly for their own retirements, and for the economy to function such that no one lives in poverty." (Tracy Miller)
(Tracy Miller)


That WOULD be the solution Tracy and the problem is that such programs erode people's will to do just that.

Among many in America's underclass, black & white, there is the dogma that, "If I f*ck up bad enough someone else will have to clean up my mess."

Neitzsche called charity "the curse of Christ" and railed against it because it undermined natural selesction among humans.

While I wouldn't go quite that far - I believe VOLUNTARY charity is a virtue, I do indeed believe that government coerced transfers ARE indeed a curse even WORSE than Neitzsche beleived charity was, because they stifle incentives for everyone and create both incentives for the profligate, reckless and irresponsible to have more children and disincentives for the more productive to have as many children as they normally would.

Any way one looks at that, it leads to disaster.

I don't even see how a "1% privatization" scheme would help the youngest workers entering the force. A college grad at age 22 starts out making, say, $40k/year...his Soc Sec taxes would be about $2400...meaning 1% would be a measly $24 a year?

Unless someone knows of a great mutual fund that returns 100%+ annually, how much is a crummy $24 annual investment (even increasing over the years to $40 and then the max $60 or $70 or whatever) gonna return over the course of a 45 year working life?

> I don't even see how a "1% privatization" scheme would help the youngest workers entering the force. A college grad at age 22 starts out making, say, $40k/year...his Soc Sec taxes would be about $2400...meaning 1% would be a measly $24 a year?

Fred, I may be wrong, but I understood the 1% to mean 1% of salary. In other words, the $40k salary guy could contribute $400 a year. Based on an average 10% annual return, and assuming a (modest) 3% annual raise, I calculate the dude would have something like $487k after 45 years in the plan. Moreover, I seem to recall Bush's proposal would have allowed 2% rather than one, which would double this amount.

But more important than any of that is the fact that 1% is better than nothing. If we push for 5%, congress would never go for it because it would be too risky to have that big an exposure in the equities market. Fine, but if we then say that 1% is too small an amount to bother with, we've guaranteed there will never be any private savings at all.

JMK: "Fred, I'm pretty sure the sum was just 1%. I'll have to look that up and confirm it."

Close, but not exactly. The program was to be inaugarated with wage-earnes allowed to self-direct the allocation of 15% of their Social Security "contribution." That would be about 1% of payroll wages for most people. The plan was for that amount to slowly increase to 50% of employee contribution, with the possibility of wage earners eventually being allowed to self-direct the investment of their entire contribution.

It's also important to remember that investment of the self-directed contribution would be limited to specified investment vehicles like index funds, mutual funds with long histories of stable growth and high quality bond funds. Fees for accepting self-directed SS investments would have also been tightly regulated.

By any objective measure, this would have resulted in substantial benefit to the vast majority of retirees. Most of the remainder would do no worse than they would under the current mechanism, and a handful of bizarre situations would result in less benefit.

"Close, but not exactly. The program was to be inaugarated with wage-earnes allowed to self-direct the allocation of 15% of their Social Security "contribution." That would be about 1% of payroll wages for most people. The plan was for that amount to slowly increase to 50% of employee contribution, with the possibility of wage earners eventually being allowed to self-direct the investment of their entire contribution." (WF)
(WF)


Ahhh, 1% of PAYROLL WAGES!

That makes a lot more sense, given that 1% of contributions wouldn't amount to much potential gain.

The investment of social security funds in the market (to "specified investment vehicles like index funds, mutual funds with long histories of stable growth and high quality bond funds") would certainly separate those funds from the general fund AND offer a lot more growth potential for those young enough to opt for them.

In my case, I'd be a little old for that (52), but for those under 40, it would seem like a great deal.

Yeah, as Barry added, "1% of salary" makes a huge difference.