the Ramifications of Social Security Privatization...
I hope everyone has had a chance to read Ben Stein's article from the previous post. I wanted to take some time to write about social security.
A few years back, President Bush was really adamant about privatizing social security. Pretty much, what that means is, all of our social security contributions right now are controlled by the government. We won't see a single cent of it, until we decide to retire and take our payments. In Bush's latest budget report, hidden in the middle of 700+ pages, is a proposal to privatize social security accounts. Individual citizens will be able to draw about 4% of their annual social security contributions (with a maximum of $1100), and manage an account themselves. This could begin as early as 2010. But don't think the change to privatization will be easy, or inexpensive. As Newsweek.com's Allan Sloan wrote,
"On page 321 of the budget proposal, you see the privatization costs: $24.182 billion in fiscal 2010, $57.429 billion in fiscal 2011 and another $630.533 billion for the five years after that, for a seven-year total of $712.144 billion."
Is it worth it to incur $712.144 BILLION in costs just to privatize social security accounts? Need I remind the government that we're in a deficit right now? (And have been for a few years). Does the government really need to be incurring $712 billion in more costs? I highly doubt it.
While I do enjoy the prospect of controlling more accounts if social security were privatized, I don't really trust the market or individual investors to adequately take control of that money. I hate to bring up age-old history, but does anyone remember how many people lost their retirement when Enron went down? A sizeable portion of America lost their 401(k) money simply because brokerages invested their money in "safe" industries, such as energy. If brokerages are putting your money into "safe" industries that could ultimately collapse, the individual investor can't be any safer...
As Ben Stein's article points out, many Americans simply do not understand the concept of saving money for retirement. In fact, I'd say the largest illusion about retirement is that social security would cover their costs. Can you even imagine if social security was privatized and Americans accidentally lost more of their retirement money? Where would regular peoples' retirements come from then?
INDIVIDUAL RETIREMENT ACCOUNTS (IRA)'s. Seriously start thinking about retirement and how you're going to fund it, because solely relying on social security is definitely not enough.
Coming Soon... the excitement of IRAs.
A few years back, President Bush was really adamant about privatizing social security. Pretty much, what that means is, all of our social security contributions right now are controlled by the government. We won't see a single cent of it, until we decide to retire and take our payments. In Bush's latest budget report, hidden in the middle of 700+ pages, is a proposal to privatize social security accounts. Individual citizens will be able to draw about 4% of their annual social security contributions (with a maximum of $1100), and manage an account themselves. This could begin as early as 2010. But don't think the change to privatization will be easy, or inexpensive. As Newsweek.com's Allan Sloan wrote,
"On page 321 of the budget proposal, you see the privatization costs: $24.182 billion in fiscal 2010, $57.429 billion in fiscal 2011 and another $630.533 billion for the five years after that, for a seven-year total of $712.144 billion."
Is it worth it to incur $712.144 BILLION in costs just to privatize social security accounts? Need I remind the government that we're in a deficit right now? (And have been for a few years). Does the government really need to be incurring $712 billion in more costs? I highly doubt it.
While I do enjoy the prospect of controlling more accounts if social security were privatized, I don't really trust the market or individual investors to adequately take control of that money. I hate to bring up age-old history, but does anyone remember how many people lost their retirement when Enron went down? A sizeable portion of America lost their 401(k) money simply because brokerages invested their money in "safe" industries, such as energy. If brokerages are putting your money into "safe" industries that could ultimately collapse, the individual investor can't be any safer...
As Ben Stein's article points out, many Americans simply do not understand the concept of saving money for retirement. In fact, I'd say the largest illusion about retirement is that social security would cover their costs. Can you even imagine if social security was privatized and Americans accidentally lost more of their retirement money? Where would regular peoples' retirements come from then?
INDIVIDUAL RETIREMENT ACCOUNTS (IRA)'s. Seriously start thinking about retirement and how you're going to fund it, because solely relying on social security is definitely not enough.
Coming Soon... the excitement of IRAs.
posted by L.Su at 8:21 AM
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