Quote from Maverick74:
No, we need to reform social security. I'm personally for getting rid of it starting for anyone under 25 and locking in anyone over 45. The people between 25 and 45 we should offer a payout of their current benefits and let them control the money in a private account. Why do I want them to control it? Because the government will just spend the money today and borrow against it. The government can't spend what they don't have. I think it's fair solution. The elderly will get what they were promised, the people in the middle will get what they currently are owed and anyone new out of school will start fresh with their own equity. You see something wrong with this?
Maverick, Millions of other Americans agree with you. However nearly all of those who rail against Social Security do so because they are constantly bombarded with misinformation. There has been for years a concerted effort by Wall Street to kill social security -- that is the ultimate source of the nonsense. And there is a faction in congress beholden to Wall Street that is going along with the effort to kill it.
You, as an individual, will always have the option of investing in a supplemental retirement plan, but Social Security, a government run insurance program, is desperately needed by most of the American work force. It's beneficial features can not be duplicated by any individual plan at an affordable cost. (please see the link below)
Social Security, despite the self-serving lies from Wall Street, is one of the real triumphs of the Federal Government. It is efficient and has worked extremely well to prevent abject poverty in old age. And it has done that at a cost that is affordable by the low wage worker. And, amazingly, it has not contributed so much as a dime to the Federal deficit. Contrast that if you will to the Medicare program.
One of the most nonsensical remarks one hears from time to time is that Social Security is a "Ponzi" scheme, and still another is that there is no Trust fund and that the government has stolen the money from Social Security and spent it. This is nonsense. The trust fund is invested in securities of the U.S. Government. This is no different than you holding U.S. Treasury bonds in a 401K or China holding Treasury securities. If the bonds in the Social Security Trust Fund are bad, then so are the ones in your 401K, and so are the ones held by China, Japan, Germany, etc.
Yes, there is a problem making good on these bonds, as the government has no way to redeem them other than to reduce spending, raise taxes, or borrow more money. That's a serious problem that needs to be addressed pronto. But to say that the government just took the money and spent it is absurd. (Not that you said that, but many others have, even those who should no better.) Politicians who are on the Wall Street payroll like to say "all they have is a pile of IOU's!" Well, I say: "If those IOU's are worthless, then so are all the other Treasury "IOU's", i.e., bonds."
Another nearly ubiquitous mistake is to lump social security together with medicare when discussing the challenges of entitlement programs. But they are as different as night and day! One program is under complete control, both contributions and expenditures, of the government, and is based on sound actuarial principles. Until now Social Security has generated huge surpluses that have been invested in Treasuries. The other major entitlement program, Medicare, is in dire straights. The cost of medical care is determined by a joint, government-private-sector Cartel controlled by the AMA, the AHA, the FDA, and the insurance industry, and the drug industry. The Cartel has pushed the cost of medical care in the U.S. far beyond that of any other developed country, while the quality of care in the U.S. is often worse than that in other countries. For decades medical costs in the U.S. have risen much faster than the CPI. It will be politically impossible to bring medical care costs under control without breaking the power of the Cartel. Sadly, the "public option", that was so effectively killed by the Cartel's supporters in congress on both sides of the aisle, would have been a first step in doing just that.
On the other hand actuarial calculation determines the payout of social security, and it has been very accurate. Payout is based on both wage indexed earnings and a COLA computed using the CPI (of course the government cheats a little on their CPI figure, which since the late 1970's is too low, but that's another matter).
The bottom line is that Social Security is sound with BOTH costs and expenditures under control of the government.
It will take only minor tweaking (if done now) to make it sound into the foreseeable future.
On the other hand, U.S. Medical care, dominated by the private sector, is in complete shambles with costs approaching eight times (in the worst cases) those in other countries.
Clearly we need more programs modeled after social security. Don't tell me that the government can never do things better than the private sector. That is obviously NOT true. In fact if one used only the examples of Social Security and the U.S. Medical care system, one could draw the absurd conclusion that only the government can do things efficiently, and the private sector always makes a mess of everything they touch.
That is just as ridiculous as saying that the Federal Government can't do anything as well as the private sector. And how often have we heard that nonsense? The truth is that the Government does somethings well and other things not so well, and ditto for private industry.
Let us keep our collective fingers crossed that Wall Street won't succeed in fucking-up Social Security the way the Medical Cartel succeeded in fucking up the health bill.
for a discussion of the pros and cons of Social Security vs. individually funded retirement plans please see:
http://www.elitetrader.com/vb/showthread.php?s=&postid=2933455#post2933455