Fields: Privatizing Social Security A Risky Gamble
SAM FIELDS
Guest Columnist
If your 401K is lottery tickets, you might be a Redneck…. Jeff Foxworthy
The September 5, Sun Sentinel had a point-counterpoint on the future of Social Security here.
Writing for the Right was a guy named Bob McClure, the CEO of The James Madison Institute in Tallahassee. Along with some payment adjustments, his centerpiece proposal is the Dubya idea to allow people to invest their Social Security accounts on Wall Street.
For him Social Security is a Ponzi scheme that can’t last. His Exhibit 1 was Bernie Madoff.
I must add this idiot to the Tea Partiers who carry signs proclaiming : “Government keep your hands off of my Medicare and the Gulf Coasters who praised the Coast Guard cleanup while denouncing Washington.
The first two don’t know that Medicare and the Coast Guard are the government.
Does McClure believe Madoff was a government program?
In reality Bernie Madoff is Exhibit 1 for opposing his plan to Wall Street Social Security. Unlike the average worker contributing to Social Security, Madoff’s investors were educated, wealthy and sophisticated.
And they still got hosed.
Exhibits 2 is the millions who now tongue-in-cheek refer to their 401-K’s as a “my 201-K after losing a fortune in the stock market crash. The market hasn’t come back yet!
THE PROBLEM: PEOPLE LIVE TOO LONG
Tens of millions of recipients breached their implied warranty to die before they were 70.
In 1990 there were 37,000 centenarians. By 2010 that was 100,000.
Today there are 4.2 million Americans over 85. In 2050 that will be 20.9 million.
Although no one knows how long people will live, there is a strong probability it will be longer than mom and dad and certainly longer than PopPop and Nana.
PRIVATIZED SOCIAL SECURITY IS LIKE PLAYING THE LOTTERY
The solution is not allowing Joe “Lunchbucket to play the stock market with his Social Security. The only winners will be the brokerage houses. They get commissions whether the market goes up or down.
The S&P declined over the ten-year period ending on Dec. 31, 2009. “Indeed, a $1 investment in the S&P 500 on Dec. 31, 1999, was worth roughly 90 cents at the end of 2009  and that negative return includes dividend income,” according to USA Today.
You would have done better putting the money in your mattress!
Social Security is a retirement safety net that should not be used to hit the slots at The Hard Rock or go on Wall Street.
Lonely old people will be inundated with cold calls from boilers rooms that would spring up like mortgage brokers in 2004. They would convince them to buy worthless penny stocks.
We would all be hearing this common refrain: “But he seemed like such a nice young man. He told me I reminded him of his grandma who he loved so much.
Millions of elderly, who unwisely invested, would end up on welfare.
If that’s allowed, the rest of us will have to subsidize the millions of losers or watch them starve on the streets.
Or perhaps we can call Dr. Kevorkian?
And Bob McClure wants you to go to Wall Street with your Social Security money? Stupid, reckless, insane.
SOLUTION: RAISE THE AGE FOR SOCIAL SECURITY
How do we solve the problem. By raising the age that people can collect maximum Social Security benefits. It will probably be at least 70.
We also need to end the automatic cost of living increases. Increases must include a responsible actuarial component based on the then current economy. These changes will keep the program fiscally sound through the rest of 21st century.
Unlike McClure’s “Wall Street For Dummies idea, this solution has little or no risk for the users. The rest of us would not have to cover grandma’s bad bets.
[Disclosure: On January 1, 2011 I start collecting Social Security]
September 6th, 2010 at 5:27 pm
Tell us whether you are collecting the full benefits before you are 70. Are you 70?
September 6th, 2010 at 7:49 pm
Sam:
The game plan for social security doesn’t work. Sure, it worked 60 years ago when there were 100 workers supporting one recipient.
The problem with your solution is that is doesn’t address the fundamental problem with S.S.: there are less than three workers supporting a recipient today. The problem won’t go away.
I heard an economist put it best a few years ago, when someone asked about “privatizing”. He opined that if S.S. never existed and the president asked the top economists to come up with a plan, no economist with any brains would use the current S.S. system as model to submit to the president. He said that an economist would be laughed out of a job.
When we hear “privatizing” we all jump to our own conclusions.
Sure, letting people gamble on their future with penny stocks would create chaos. However, allowing investing in perhaps five different government approved plans would be an interesting option.
Don’t forget, state employees in Florida so have the option of investing their retirement funds.
September 6th, 2010 at 9:40 pm
the only way anyone can still think about W’s social security idea is there are not enough of those brokers sued for gross breach of what should be a fiduciary obligation to satisfy these short sighted thimble brains…all these bust are greed related and these guys and firms are pushers
September 7th, 2010 at 7:22 am
“Don’t forget, state employees in Florida so have the option of investing their retirement funds.”
The solution is simple. Allow me to invest the money I spend on s.s. into my FRS (or any other state’s) plan.
September 7th, 2010 at 7:41 am
I will be 66 in February and thus will be eligible for benefits without a penalty. I would get more if I waited til 70 but the math did not make sense.
September 7th, 2010 at 7:45 am
It’s my money
September 7th, 2010 at 7:53 am
Social Security has many problems in the way it works. Some have been discussed in this post and comments. The biggest is the viewpoint that SS is a retirement fund. It is not.
SS is a safety net. It’s supposed to reflect the amount that a former worker needs in their old age to ensure they have the the basics. A retirement account is there to ensure some level of lifestyle in retirement. Those are two very different concepts.
The sustainability of that concept is being tested by circumstance but making the distinction is very important.
A private individual may want to risk or speculate with their retirement funds. That is their business. The government under law owes qualifying seniors a monthly social security payment because they earned that payment through a lifetime of making contributions.
The investment strategy there cannot be speculating on the market but investing in sure yet limited returns. The government must also make sure there is enough in the pot so that everyone can collect when their time comes. If what they do is push the collection to age 70, that will cause even greater problems in the workforce as people will feel the need to work longer this is not a solution, it is avoidance of payment.
September 7th, 2010 at 7:57 am
Dear It’s
It might start that way but the first time the market goes through a general upswing the pressure will be on to allow recipients to make their own choices.
The mantra will sound something like this: “Having the government tell investors which funds they may invest in is just un-American. The market is returning 10% while the govt. appreved programs are only returning 5%. We are cheating our Seniors.” yadda, yadda, yadda!
Do you think Wall Street is stupid?
Over the next fifty years I could easily see a trillion in profits for the banking houses. Do you think they won’t fight to get that pie.
Once again, how quickly we forget the housing debacle which came from incremental loosening of conservative lending rules. All of it was done in the name of free choice and the American Dream.
Some folks never learn. Lloyd Blankfein and his scion are counting on that.
September 7th, 2010 at 8:23 am
It is often forgotten that illegal aliens many times pay Social Security, but will never collect it. Immigration reform would help Social Security.
ITS MY MONEY @ 7:49p.m. is not correct because only part of it is his money. The rest is money that his employer pays. Would the employers money continue to be paid under privatization or would that be another tax cut?
SOCIAL SECURITY MISUNDERSTOOD @ 7:53 a.m. explained the situation well. Too many have not planned for their retirement and expect to live off of Social Security rather than save their own money. That isn’t what was intended.
Social Security is from an era when grandparents lived with their children and grandchildren. It was suppose to give them a little moneywith the bulk of the support coming from their relatives. Do we want to return to that arrangement and can most afford to do it?
Fields is right. We either fix Social Security or we will be supporting our grandparents, parents and other elderly.
September 7th, 2010 at 9:49 am
as one of those lucky ones over 60 who is collecting i would like to thank all of those still worling for this largess. seriously, i went to the social security office on oakland park blv d and there must have been well over 100 people there, funny though only about 3 were over 60, the problem seems not to be with the retirees but all the others who for various reasons, sometimes political, were included, how many kids can one keep producing and the benefits still roll in, i would love to see a statistical breakdown of the percentages given to various groups. the critics always yell hit the retirees but arent they the only group who did work and pay in,
September 7th, 2010 at 11:32 am
The S&P declined over the ten-year period ending on Dec. 31, 2009. â€Indeed, a $1 investment in the S&P 500 on Dec. 31, 1999, was worth roughly 90 cents at the end of 2009
Comparing Social Security to 10 years in the stock market is intellectually dishonest. Social Security is a MINIMUM 35-year investment. It’s actually more like 65 (the life expectancy of an 18-year-old).
But along those lines, what’s the 10-year real return from Social Security? The CBO tells us that the average American can expect to get less out of Social Security than they pay in, to the tune of about -1.33% per year. So your $1 invested in Social Security would be worth about 88 cents after 10 years.
September 7th, 2010 at 4:46 pm
Dear “let undocumented workers pay”:
You mean “illegal workers”. The “undocumented” phrase is a dead give-away as to where you are coming from.
Also the comment that it not “my money” is a typical and unfortunate mindset that is becoming far to common in the new hope and change mentality.
It is my DAMN money and not the government’s money. I earned it!
September 8th, 2010 at 10:49 am
Sam is a hypocrite. He is collecting money at 66 and wants everybody else to wait until 70. Why doesn’t he set an example and forego collecting until 70? He doesn’t need the money since I hear he is a very successful ambulance chaser.
September 8th, 2010 at 3:38 pm
Even more threatening is government employee salaries and pensions. There are fire fighters, police and even garbage collectors who are paid 90 percent of their salary for life after retiring in their 40s. It has got to stop.
The way to stop it is to break the government employees unions. It is time to end their blackmail over weak elected officials.
September 8th, 2010 at 4:11 pm
Stop It Already: “There are fire fighters, police and even garbage collectors who are paid 90 percent of their salary for life after retiring in their 40s.”
I wish you would provide a specific example for this.
BSO officers, for instance, have their retirement through the Florida Retirement System. Officers are eligible to receive retirement benefits at age 55 with at least 10 years of service. Early retirees (minimum of 25 years service)lose 3 percent of retirement pay for each year under 55.
Benefits are calculated based on years of service. In order to receive 90% of pay, an officer would have to work 45 years.
There may be exceptions, but that is the basic plan.
Perhaps you had some other retirement plan in mind?
September 10th, 2010 at 7:12 am
Dear It’s my money
Sounds like you think illegals should collect Social Security since it was “their damn moneyâ€.
September 13th, 2010 at 8:30 am
Sam Fields doesn’t know what it is like to really work a backbreaking job, rather than sit behind a desk. Otherwise he wouldn’t suggest that the age of Social Security be raised to 70.
My mother was a nurse and there was a lot of difference between working those nights shifts at age 62 than 70. Getting a patient out of bed or turning them over can be back breaking work. Fields would have her wait extra years until 70 to get Social Security.
The idea might be good for people sitting on their ass behind a desk like Fields. People whose work requires straining their bodies or using their hands, 70 is too old.