9 Comments

The article’s author says that the solution to this is to leave the management of the money in the hands of the individual. Pardon me if I think that is like advising someone with a headache to perform his own brain surgery. Although the basics of fiscal responsibility are easily discovered, the question arises: if people are capable of saving and investing for their own old age, then how did we wind up with all these public pensions in the first place?

I have long suspected that the urging of people to take their own power in their own hands is intended to make it easier for the real wolves to clip them more easily. I have been studying and investing in the stock market since I was eight and I still get smacked down once a decade or so. There are many honestly run companies out there, but there are also a lot of shell games, and Wall Street is in the business of making money for themselves.

I do not have a solution. There are some people who are capable of managing their own affairs. There are some who need help. There are some who need a keeper. There are honest fund and pension managers, dishonest fund and pension managers and delusional fund and pension managers and there is no one-size-fits-all solution. I just wish some of these geniuses would recognize it.

Bob

Bob said: “…there is no one-size-fits-all solution.”

Then why is it that all we get are one size fits all so called solutions? See the ACA, Medicare, Socialist Security, unemployment “insurance”, and a host of other programs that one is forced into?

I would LOVE to be able to opt out of Social Security and pocket the cash that I pay in those sinkhole taxes, plus the money my employer is forced to put into the system “for” me. If I die tomorrow, it’s for naught, and my heirs will have zero to show,but were I to have used those monies to purchase actual assets, they’d have a lot to show for it, plus I could use those assets on my terms. Ditto the stupid gold plated health plan at work that my union forces on me – thank you, but I don’t need first dollar paid BS, I’ll take a catastrophic only plan and pocket the cash difference. Ditto the union pension – uhhh…what kind of genius actually wants to work until 65 plus take the chance that some schmuck I can’t control won’t drive it over the cliff in the next 20-ish years (like Eastern Airlines, United, the steel industry, GM, Detroit, etc).

@No Name Guy

FICA – the Social Security withholding is a dedicated tax. It goes to providing benefits for current retires and others, to cover administrative expenses, and to maintain a trust fund. The trust fund was to carry the system through economic downturns to keep a stable tax rate In 1983 Mr Greenspan insisted that the trust fund be expanded to handle the bulge in retirements of baby boomers. The excess FICA over the years covered over the true cost of government and established a liability for income taxes to now.

But, my point. The fund needed to fund social security as a private plan would be funded would hold all the wealth of the United States. Everything – houses, cars, factories, etc. – would be owned by the Social Security administration. That is why Social Security is the way it is.

William

I know how the system works, that’s exactly the point of my comment, which with your reply you clearly don’t get. I’m not advocating for privatizing SS, but allowing individuals to opt OUT of it – no taxes, but also, no so called “benefits” either, and hence no liabilities.

You really missed the point.

I can take care of myself, thank you – I wish people would stop trying to “help” me, since it’s of the typical form “I’m from the Government and here to help” – I grab my wallet and wonder what new burdens I’m to bear for the “help”. The programs I listed are all wealth destroyers, they’re net burdens on society, with features that are either over priced or not usable for many. When the Government sticks a gun to my head and forces me to buy a product that has zero value for a high cost that’s a net destruction of wealth.

Heck, I’m already counting SS as exactly zero in my retirement plans. Ditto that pension that I’ll supposedly get, since I’m sure some knucklehead will come along and run the company into the ground before or while its paying.

I can, and have, carefully built my own set of real income producing assets that provide a sufficient income, one under which I have control, and one under which you have zero responsibility for. I’m under 5 years from punching out of work permanently with enough assets such that I’ll never touch the principal so long as I live, and be able to leave those to my heirs, be they family or charity.

Bob,

Money in the hands of the govt – see, for ex, the Social Security “lockbox” – returns zero cents on the dollar. Even the worst indiv investor can get at least that much back.

Unlikely as it may seem, Ras, I have known people who think they are investing who lose money.

Bob

Bob,

Investors who (sometimes) lose money? You’re talking to one of them right here. I’d have to lose 100 cents on the dollar to keep up w/the govt, tho; tough league 🙂

No Name Guy

One possibility for an opt out person is destitution at old age. We don’t let people die in the street so the opt out was not full. Another possibility is that the opt out successfully saves for retirement. That would be fine if the opt outs were rare. Not everybody can opt out and save as the economy could not hold the savings. Look at CREF for example. It is so huge that it can not take positions on stocks easily and relies on Indexes for investment. Your error is in applying micro theory, one guy opting out, to a many guy system. Social Security has to be like it is.

A second error comes from ignoring the tax increases needed to provide for current retires. My understanding is that Argentina got caught this way when it foolishly privatized its Social Security system.

A third error comes from ignoring insurance benefits – disability, dialysis, etc.

I am glad that you have done well in life. I suspect that good luck as well as talent and hard work were in play. Bill Gates got into operating systems because the fellow chosen for the task didn’t want to be bothered by IBM.

So…what return rate our we getting on the investment in SS? Last I heard, it was not zero but less than .5 percent.

Things change and it’s been a long time since I really looked into the…um…investing that the gubmint does with my retirement portion that they control, but .5 will take about 144 years to double. Once. Not multiple times over the course of the next 40 years. Just once.

SS is in a pyramid scheme in all but name.

If I could have that money back (don’t know if the company portion would really be available to me, but let’s act if it will) that’s 11.3 percent of my earnings potential going to, by all arguments, a non-growing fund. Would anybody plan that way? Invest or save that way? Let me put a percent into SS and another into Medicaid. Let me plan the rest myself.

There’s always the argument that we “don’t let people just die in the streets.” Agreed. But, call me a cold-hearted bastard, I have no sorrow for those that do no planning and then come looking for handouts when the result is that they have no way to pay to live. People can’t live their lives reckless and free and then expect someone else to pick up the tab.
People need to live within their means.
People can give what they want and should keep more of their earnings to begin with.