If Social Security Had Been In Private Accounts The Stock Market Drop Could Have Been A Disaster

David_42

Registered Democrat.
Aug 9, 2015
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Well, no shit.
If Social Security Had Been In Private Accounts The Stock Market Drop Could Have Been A Disaster
The stock market continued a period of volatility on Monday. Media reports sounded the alarm as the DOW opened 1,000 points down and other indexes took huge hits, only to climb back up a bit later in the day. While that performance, which had some people calling it black Monday, may have knocked a good deal of money out of people’s 401(k) retirement accounts, Social Security benefits remain by and large untouched by such fluctuations.

Some Republicans, however, are interested in changing that.

In June, presidential candidate Jeb Bush said that he thinks the next president will have to try to privatize Social Security. Others have gotten behind the idea as well: Sen. Rand Paul (R-KY) drafted a plan in 2013 that included partial privatization, and Sen. Ted Cruz (R-TX) is in favor of using private accounts. Rep. Paul Ryan (R-WI) has included privatization in his budget blueprints.

The market drop, and ones before, expose the dangers of such a plan, which usually entails diverting some or all of the money workers contribute to Social Security through their paychecks into private investment accounts. That would put individuals in charge of making smart enough investment choices in the market to make big enough returns to support themselves in retirement.

But the reality is that’s not within reach for most individual people. During a market rout like Monday’s, many people will panic and sell. “We know a lot of people do what economists say is irrational, they sell at a low point,” said Dean Baker, co-director of the Center on Economic and Policy Research. Research shows that the best thing to do during a downturn is to hold out if possible. But that’s not how most people will react. “People see something like this and go, ‘I better get out,'” Baker said. “When they see the market start to go up, they say, ‘I better buy in,’ and then they’ve lost a lot.”

This is one of the big problems with privatizing Social Security: individual investors don’t tend to be that savvy in chasing higher returns. “A lot of people make wrong decisions,” Baker said. This is even true when it comes to retirement planning: Many people leave money on the table with their 401(k)s by not taking advantage of employer matches or cash out when they switch jobs and incur taxes. The point of Social Security contributions is to make saving for retirement mandatory, he pointed out. But “if you do that and then just tell people to do whatever you want [with the money], then a lot of people will make mistakes and end up with not very much in retirement.”

On a larger level, putting people’s Social Security contributions into private accounts makes them far more exposed to the irrationality of the market. “What’s beautiful about Social Security is that in the long the return workers get on contributions is linked to productivity growth and wage growth,” said Monique Morrissey, an economist at the Economic Policy Institute. “Whereas markets are notoriously volatile and often behave in ways that are not based on the fundamental strength and weakness of the economy.”
 
There would be no 'social security' if all citizens had were private accounts – whether there was a stock market drop or not.

The raison d'etre of Social Security is to safeguard retirement funds from the capricious volatility of private markets.

Hence the clueless idiocy of conservative advocacy of 'privatizing' Social Security.
 
There would be no 'social security' if all citizens had were private accounts – whether there was a stock market drop or not.

The raison d'etre of Social Security is to safeguard retirement funds from the capricious volatility of private markets.

Hence the clueless idiocy of conservative advocacy of 'privatizing' Social Security.
You act like conservatives would care about seniors when they can't work.
 
If Social Security Had Been In Private Accounts The Stock Market Drop Could Have Been A Disaster
Only for the guy who put his money into the account right at the beginning of the drop, and took it out right after the drop.

Do you know anybody who did that with any of their investments (401K etc.)?

I didn't think so.

Thanks for the hysterical "THE SKY IS FALLING" analysis with no connection to the real world.
 
If Social Security Had Been In Private Accounts The Stock Market Drop Could Have Been A Disaster
Only for the guy who put his money into the account right at the beginning of the drop, and took it out right after the drop.

Do you know anybody who did that with any of their investments (401K etc.)?

I didn't think so.

Thanks for the hysterical "THE SKY IS FALLING" analysis with no connection to the real world.
More to it then this, moron.
"But the reality is that’s not within reach for most individual people. During a market rout like Monday’s, many people will panic and sell. “We know a lot of people do what economists say is irrational, they sell at a low point,” said Dean Baker, co-director of the Center on Economic and Policy Research. Research shows that the best thing to do during a downturn is to hold out if possible. But that’s not how most people will react. “People see something like this and go, ‘I better get out,'” Baker said. “When they see the market start to go up, they say, ‘I better buy in,’ and then they’ve lost a lot.”"
 
The raison d'etre of Social Security is to safeguard retirement funds from the capricious volatility of private markets.
No, the reason for Social Security is to provide a free slush fun that politicians can steal from to get money for their pet projects.

You know that the Social Security Trust Fund is empty, don't you? All the money has been taken out and spent on other things. The only thing left in the Fund, is a bunch of IOUs that can't be redeemed unless politicians raise taxes hugely, cut back on the slush fund projects hugely, or borrow even more hugely from other sources.
 
The raison d'etre of Social Security is to safeguard retirement funds from the capricious volatility of private markets.
No, the reason for Social Security is to provide a free slush fun that politicians can steal from to get money for their pet projects.

You kno that the Social Security Trust Fund is empty, don't you? All the money has been taken out and spent on other things. The only thing left in the Fund, is a bunch of IOUs that can't be redeemed unless politicians raise taxes hugely, cut back on the slush fund projects hugely, or borrow even more hugely from other sources.
Oh dear lord, without social security, seniors would be in a horrible place, senior poverty/homelessness was horrid before SS for a reason.. Raise the contribution cap..
 
If Social Security Had Been In Private Accounts The Stock Market Drop Could Have Been A Disaster
Only for the guy who put his money into the account right at the beginning of the drop, and took it out right after the drop.

Do you know anybody who did that with any of their investments (401K etc.)?

I didn't think so.

Thanks for the hysterical "THE SKY IS FALLING" analysis with no connection to the real world.
More to it then this, moron.
You know a liberal has lost the argument when he starts misspelling simple words and calling you names. :rolleyes-41:
I'm tired and high. Want to puff?
 
There would be no 'social security' if all citizens had were private accounts – whether there was a stock market drop or not.

The raison d'etre of Social Security is to safeguard retirement funds from the capricious volatility of private markets.

Hence the clueless idiocy of conservative advocacy of 'privatizing' Social Security.
You act like conservatives would care about seniors when they can't work.
It's about a 54 year old father of 4 who did everything he was supposed to do according to conservatives: go to college, earn a degree, start a rewarding career, invest and save for retirement – only to lose his job through no fault of his own as a consequence of the December 2007 Recession, along with his life's savings.
 
If they invested on the day before the drop. Otherwise you're talking out of your ass
LOL. Sure.

You just proved yourself to be ignorant.

You do know about the Texas Opt-Out plan?

How Three Texas Counties Created Personal Social Security Accounts and Prospered

In Texas they allowed three specific counties to Opt-Out of Social Security. They invested in the Stock Market, through specific approved investments.

From the article:

  • A lower-middle income worker making about $26,000 at retirement would get about $1,007 a month under Social Security, but $1,826 under the Alternate Plan, according to First Financial’s calculations.
  • A middle-income worker making $51,200 would get about $1,540 monthly from Social Security, but $3,600 from the banking model.
  • And a high-income worker who maxed out on his Social Security contribution every year would receive about $2,500 a month from Social Security vs. $5,000 to $6,000 a month from the Alternate Plan.
The bottom line is that in every single instance, despite the ups-and-downs of the market, everyone who Opt-Out of socialist insecurity, did better, and by a wide margin.

This is undeniable fact.

Not only is Social Security going broke, not only does it take up 15% of your income, and not only are benefits going to be cut in the future without any question, but you would be better off investing your money in any conventional stock market investment.
 
There would be no 'social security' if all citizens had were private accounts – whether there was a stock market drop or not.

The raison d'etre of Social Security is to safeguard retirement funds from the capricious volatility of private markets.

Hence the clueless idiocy of conservative advocacy of 'privatizing' Social Security.
You act like conservatives would care about seniors when they can't work.
It's about a 54 year old father of 4 who did everything he was supposed to do according to conservatives: go to college, earn a degree, start a rewarding career, invest and save for retirement – only to lose his job through no fault of his own as a consequence of the December 2007 Recession, along with his life's savings.

Lies. You are lying.
 
If they invested on the day before the drop. Otherwise you're talking out of your ass
LOL. Sure.

You just proved yourself to be ignorant.

You do know about the Texas Opt-Out plan?

How Three Texas Counties Created Personal Social Security Accounts and Prospered

In Texas they allowed three specific counties to Opt-Out of Social Security. They invested in the Stock Market, through specific approved investments.

From the article:

  • A lower-middle income worker making about $26,000 at retirement would get about $1,007 a month under Social Security, but $1,826 under the Alternate Plan, according to First Financial’s calculations.
  • A middle-income worker making $51,200 would get about $1,540 monthly from Social Security, but $3,600 from the banking model.
  • And a high-income worker who maxed out on his Social Security contribution every year would receive about $2,500 a month from Social Security vs. $5,000 to $6,000 a month from the Alternate Plan.
The bottom line is that in every single instance, despite the ups-and-downs of the market, everyone who Opt-Out of socialist insecurity, did better, and by a wide margin.

This is undeniable fact.

Not only is Social Security going broke, not only does it take up 15% of your income, and not only are benefits going to be cut in the future without any question, but you would be better off investing your money in any conventional stock market investment.
Yes, yes, cite 3 counties in texas.
 
There would be no 'social security' if all citizens had were private accounts – whether there was a stock market drop or not.

The raison d'etre of Social Security is to safeguard retirement funds from the capricious volatility of private markets.

Hence the clueless idiocy of conservative advocacy of 'privatizing' Social Security.
You act like conservatives would care about seniors when they can't work.
It's about a 54 year old father of 4 who did everything he was supposed to do according to conservatives: go to college, earn a degree, start a rewarding career, invest and save for retirement – only to lose his job through no fault of his own as a consequence of the December 2007 Recession, along with his life's savings.

Lies. You are lying.
No, he's not lying, also:
Galveston | Strengthen Social Security
 
If they invested on the day before the drop. Otherwise you're talking out of your ass
LOL. Sure.

You just proved yourself to be ignorant.

You do know about the Texas Opt-Out plan?

How Three Texas Counties Created Personal Social Security Accounts and Prospered

In Texas they allowed three specific counties to Opt-Out of Social Security. They invested in the Stock Market, through specific approved investments.

From the article:

  • A lower-middle income worker making about $26,000 at retirement would get about $1,007 a month under Social Security, but $1,826 under the Alternate Plan, according to First Financial’s calculations.
  • A middle-income worker making $51,200 would get about $1,540 monthly from Social Security, but $3,600 from the banking model.
  • And a high-income worker who maxed out on his Social Security contribution every year would receive about $2,500 a month from Social Security vs. $5,000 to $6,000 a month from the Alternate Plan.
The bottom line is that in every single instance, despite the ups-and-downs of the market, everyone who Opt-Out of socialist insecurity, did better, and by a wide margin.

This is undeniable fact.

Not only is Social Security going broke, not only does it take up 15% of your income, and not only are benefits going to be cut in the future without any question, but you would be better off investing your money in any conventional stock market investment.
Yes, yes, cite 3 counties in texas.

So evidence has been presented, which you can't refute. Anything else you'd like to not add to the conversation? Or are you done here?
 
If they invested on the day before the drop. Otherwise you're talking out of your ass
LOL. Sure.

You just proved yourself to be ignorant.

You do know about the Texas Opt-Out plan?

How Three Texas Counties Created Personal Social Security Accounts and Prospered

In Texas they allowed three specific counties to Opt-Out of Social Security. They invested in the Stock Market, through specific approved investments.

From the article:

  • A lower-middle income worker making about $26,000 at retirement would get about $1,007 a month under Social Security, but $1,826 under the Alternate Plan, according to First Financial’s calculations.
  • A middle-income worker making $51,200 would get about $1,540 monthly from Social Security, but $3,600 from the banking model.
  • And a high-income worker who maxed out on his Social Security contribution every year would receive about $2,500 a month from Social Security vs. $5,000 to $6,000 a month from the Alternate Plan.
The bottom line is that in every single instance, despite the ups-and-downs of the market, everyone who Opt-Out of socialist insecurity, did better, and by a wide margin.

This is undeniable fact.

Not only is Social Security going broke, not only does it take up 15% of your income, and not only are benefits going to be cut in the future without any question, but you would be better off investing your money in any conventional stock market investment.
Yes, yes, cite 3 counties in texas.

So evidence has been presented, which you can't refute. Anything else you'd like to not add to the conversation? Or are you done here?
Regardless, you're misunderstanding, well, the entire point of SS.
At the time these plans were created, it was claimed that this type of arrangement would generate higher overall returns for retirees. In reality, the vast majority of workers have fared worse than under traditional Social Security. Compared with Social Security, the Galveston plan disproportionally benefits high earners with many years of participation in the plan and no dependents, and exposes all retirees to risks arising from inflation and swings of the stock market. Moreover, because even plan participants can earn benefits under Social Security with 40 quarters of coverage in employment covered by Social Security, many plan participants gain Social Security’s cornerstone protection, even though covered by the Galveston for most of their work lives. For this and reasons described below, the Galveston plan is simply not a viable alternative to a national Social Security system.
Social Security and the Galveston plan do not share the same goals: Social Security is wage insurance that provides basic protection against loss of income resulting from retirement, disability or death of a worker; it is not intended to be a wealth-maximizing vehicle. Social Security’s aims at providing a measure of economic security and a guarantee of lifetime benefits for workers that have contributed to the system. Though Social Security funds could be invested in equities, Congress has decided that those funds should be kept in the world’s safest and most reliable investment, U.S. Treasury bonds. In contrast, supporters of the Galveston plan see that plan as a way to build personal savings, and some view it as a means of “maximizing returns” in the market. Its funds are invested in fixed-rate marketable securities.
Women and low-income workers are not well served by the plan. Since the Galveston Plan's retirement benefits are based on what workers accumulate in their accounts during their term of county employment, low-wage workers lose the benefit of the progressivity in the Social Security benefit formula which provides proportionately larger benefits to those working for many years at low wages. Women and others who are likely to be intermittent or short-term employees often earn cumulatively less and would also lose important Social Security coverage. Unlike the Galveston plan, their Social Security work history stays with them as they move from job to job. Moreover, the plan does not require spouses to select a joint survivor annuity. And, unlike Social Security, there are no spousal benefits and there are no guaranteed benefits for divorced spouses.

·Substantial inflation risks appear with the Galveston plan. Inflation significantly erodes Galveston’s retirement, disability, and survivor’s benefits since the plan does not include annuities that are indexed to inflation. A Pension Research Council report noted that Galveston plan benefits could lose 46 percent of their purchasing power after 20 years, with yearly inflation averaging three percent. This threatens the purchasing power of benefits for seniors as time passes, when the adequacy of benefits is most important.
nder the Galveston plan, workers are subject to fluctuations of the stock market. Even though Galveston funds are invested conservatively, they still carry substantially more risk to workers and their families than traditional Social Security. One study has shown that a typical worker with a partial private Social Security account retiring in 2008 would actually have seen a negative net annual rate of return from his investments because of the recession – and lost $26,000 through the market. Market-based plans leave retirees vulnerable to the winds of economic fortunes at the time they retire; by contrast, Social Security provides benefits that are protected from both inflation and economic downturns.
 

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