Why we must privatize Social Security By : TheBrutalTruth (2008-09-30 21:14:10)

Social Security is dead!

It is not Secure, but it is Social(ist).

It has become nothing more than another socialist wealth transfer scheme that transfers wealth from those that are working (from each according to their ability) to the old and disabled (to each according to their need).



To the average American Social Security is the promise that when we are ready to retire that our retirement will be guaranteed, and that the money that we have paid into the system will be returned to us.

What the government doesn't tell you is that its already spent or borrowed the money that you paid into Social Security.

Economist Thomas Sowell argues in his books and columns that Social Security is a pyramid scheme. For example, in "Social Security: The Enron That Politicians Have In the Closet", he writes:

Social Security has been a pyramid scheme from the beginning. Those who paid in first received money from those who paid in second — and so on, generation after generation. This was great so long as the small generation when Social Security began was being supported by larger generations resulting from the baby boom.

But, like all pyramid schemes, the whole thing is in big trouble once the pyramid stops growing. When the baby boomers retire, that will be the moment of truth — or of more artful lies. Just like Enron.

Just like Enron...

That is a disturbing factual statement.

During the 1950s and 1960s the government expanded the benefits, and then when it realized that maybe expanding the benefits wasn't such a great idea because it threatened the solvency of Social Security they started raising the tax rate and maximum amount that could be taxed.

It continued to do this from the original 2% of the first $3,000 to the current 12.4% on the first $102,000 that you earn.

Hell of a jump, and a hell of a lot more money being taken out of your pocket and then loaned to the government at absurdly low rates. Ironically, if the credit-worthiness of the government was rated honestly it would receive BELOW INVESTMENT GRADE, but the excess money from Social Security is invested in Bonds issued by the Federal Government.

But first we must all agree that it is broken, and that it has failed to live up to its promise of allowing citizens of the Republic of the United States of America to know that they would have at least some income in retirement.

That is no longer the case for any one that is now less than a decade into the workforce. By the time we retire we will have easily seen $84K vanish from our pay checks (assuming we all make at least $17K/year) during the lifetime of our employment.

Had we invested this $2,100 each year, or $175/month), in stocks we would see that $2,100 become $199,553.6 at just a 5% yield. But the average growth rate of stocks has been 9% per year, so that $2,100 would actually become...

...

...

...

$709,553.13, and at 9% the yield would be $63,859.78 per year, or in simple terms.

A HELL OF A LOT MORE THAN WE ARE GOING TO GET BACK FROM THE GOVERNMENT!

But the government is afraid that if we were allowed to actually have financial freedom we wouldn't need them any more. We would be able to enjoy life, and have fun. We would no longer be forced to beg, and grovel for them not to bend us over with high confiscatory taxation so much.

Now, imagine that since the average worker currently makes $50K that instead of just the measily $2,100 (which allows McDonald's workers to retire in comfort) we are paying in $6,200 per annum.

That $6,200 would become...

...

(this is really going to FUCKING SHOCK THE HELL OUT OF YOU!)

...

$2,094,871.16

yielding

$188,538.40/per annum.

That is... a lot of cash!

Of course, it also explains why any one with the bare minimum of intelligence should be busily investing as much of their income as possible in stocks on their own, because only then will they achieve financial freedom in retirement (actually probably before then.)

It also explains why the rich lobbyists, lawyers and bankers have fought tooth and nail to avoid any attempt to increase OASDI withholding higher than its current $102,000 cap. They know that it is a system for fools and morons, and know that they will be better off investing in a ROTH IRA to fund their own retirement.

But, Social Security was supposed to be a way to ensure that every American had a some what secure retirement. Why don't we convert it to a system that would result in Every American getting a Secure retirement that allows them to enjoy their "Golden" Years?

but what about the currently retired, and those that are in the middle of their career.

Well, there is a way to work around this. First, we have to acknowledge that the United States must keep its promises, and then we must figure out how to ensure that those that are currently on this socialist program continue to get benefits, and those that have contributed get their money back.

Probably the best method would be to slowly phase it out utilizing something like the Cato Institutes Plan.

New workers (and any one else opting out) would be allowed to divert their share of the social security contribution tax to private accounts that they controlled.

For maximum contributions of $6,200 a year or thereabouts (the figure is slightly higher, but this is close enough.) As the current work force ages and the last of the baby-boomers expires we can increase that until the entire Social Security Contribution is placed in privately controlled accounts.

That terminates Social Security in 40 years, and also would balance out the need for additional funds to ensure those that are retiring still see what the government promised them given to them.

We can also allow people who have already spent 20 years working to opt out entirely, and thus potentially accelerate the ability to allow individuals to contribute the full 12.4% of OASDI into private accounts that they control.

In the end not only will we have a government that has met its promises, but one that has also ended an inefficient system prone to fraud, cheating and corruption with one that is efficient, and fair, and greatly exceeds the promise that government made (and broke).

Or we can follow the plan of the Cato Institute and just allow people to opt out while seeing their 6.2% contribution go into private accounts (those already working would see a lumpsum pay out.)



America, we need to wake up to the fact that Social Security is broken, and that if we wait until it is in the red it will be too late to correct the problems with it.

We must stand up for our ability to fund our own retirement when empowered to do so, and stand up for our right as individuals to enjoy our old age in comfort and luxury!



[References]
IHF: What Every American Needs to Know about Social Security and the Mandatory Medicare-Enrollment Policy

http://en.wikipedia.org/wiki/Social_Security_(United_States)

Social Security Texas school district controversy - Wikipedia, the free encyclopedia

The 6.2 Percent Solution: A Plan for Reforming Social Security

Cato Institute (6.2% Plan)

__________________
Libertas inaestimabilis res est - Liberty is a thing beyond all price. | Sic Semper Tyrannis

Where have I heard this tune before?








PS- Good post. I agree.

Thanks Ccodaine, and no, I don't have any connection to Bush, I'm just your average salary slave concerned about how enjoyable his life will be in retirement.

__________________
Libertas inaestimabilis res est - Liberty is a thing beyond all price. | Sic Semper Tyrannis

Right now between my husband and I we've paid nearly $40,000 into social security. That is almost exactly the amount we owe on our house. I would feel a lot more secure if I could have paid off my home with that money instead of Social security jacking me for it.

When it's our turn to collect SSI they're going to give us the finger and we aren't going to get shit back.

Now they're reaming us all with medicare tax. Think about this one. How many people don't have any health insurance and can't afford wellness exams? How many of those people are going to die of diseases that could have been cured if caught early. That's a lot of money they are taking in that they won't be paying back out. Lets also not forget how many people are going to have severe health problems by the time they get to madicare age from lack of health care now.

A work physical at my doctors office if you have no insurance and have to pay cash, $190.00 All they even do is take vitals and discuss your current state of health. Then they wonder why people say they can't afford to go to the doctor.

Don't forget that as pass through entities a good portion of that is going to get taken in taxes.

I actually work for a medical billing company, and I've estimated that for the $190 office visit, insurance only pay $100, but if the doctor gets a paying customer about half of that is going to go to taxes.

So I think the politicians have it wrong, the cash paying customers are stuck subsidizing insured customers and customers that don't pay.

__________________
Libertas inaestimabilis res est - Liberty is a thing beyond all price. | Sic Semper Tyrannis

As far as the comments about the house, I know how that goes, I'm kind of torn between waiting the 10 years or so it'll take for me to have enough dividend income to pay for a house with dividend income or purchasing one right now to escape rent, and loanership.

__________________
Libertas inaestimabilis res est - Liberty is a thing beyond all price. | Sic Semper Tyrannis

Let's not forget that while I'm being jacked for taxes I'm still trying to come up with money to pay property tax. No matter which way you turn there is some fat fucker in a suit with his soft callous free hand sticking out.

Grr, I hate property taxes. I understand the need for them, but I still don't like them.

I've got the perfect plan for my Social Security. I'm going to treat it like I did the rebate checks this past summer -- I won't accept it. (I burned my rebate check.) I don't want money from the government, even if I paid into it. I'm absolutely positive that there are other people who could use that money more than I would, and the government itself has buttloads of things to pay for, and I'm doing fine, so I see no reason for me to accept Social Security when I'm old enough to get the checks.

I prefer being a giver in life, rather than a taker. I guess that's easier for me than for some -- I chose not to have children (world's overpopulated enough without my help), and I will probably outlive my significant other, and I can't take it with me when I die. And I'm a pretty simple guy, no extravagant tastes; I'm pretty happy with just the basics.

It helps that I grew up ridiculously poor, living-in-cars poor sometimes, nothing-to-eat poor fairly often. So when I tell people that I burned my rebate check, they're flabbergasted, because I live a firmly middle-class life. But to me, a middle-class life is so far beyond what my life was like earlier on, that I really, truly feel blessed with what I already have. That results in me lacking the greed or ambition to push for more than what I have, to become what others call rich. Plus, it was nice to retire in my late 30s instead of my 60s like many do. That gives me an extra 30-ish years to ENJOY my life, rather than spending that 30 years in the neverending quest for more, more, more.

Yeah, let's turn our SS over to the same bunch of guys that caused this financial meltdown, genious. I'm glad that my SS is guaranteed till way past my lifespan, but for my grandkids sake, I hope they don't give all your hard earned money to these greedy pricks. Then when you're ready to retire, they'll give you an IOU, sounds great. I have a plan, send all your money to me and when I die, we'll have a lotto to see who gets to keep on getting it, well, that's if I haven't spent it all on yachts, third world countries, 130 million dollar estates, owning senators and congressmen, etc.

__________________
Life is good, the water is sweet. The ground keeps moving beneath my feet.

That's what I call a success story.

Vi

__________________
Liberals are people that will believe anything twice.