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The W - Current Events & Politics - State of the Union Address (Page 2)
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Corajudo
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Since: 7.11.02
From: Dallas, TX

Since last post: 114 days
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#21 Posted on | Instant Rating: 6.23
My whole problem with what Bush is proposing is that it puts people's security into a system that's even more complex than the current social security system. Most people in the country have no clue how the market works - and those who think they know are often completely wrong. Only a select few would really be able to take advantage.

And really, it's not even about losing money, but about earning at a steady rate - at least enough to get you through retirement. Even people don't lose the account, will the earnings on it even be enough to sustain them - and how do you guarantee that such a system will provide security for the generations that need it.

Most people in this country do not own stocks. They have no clue what they are getting into with this kind of program.


This is not entirely true. The system, in its current iteration, will not provide for people under 55, unless they pay higher taxes or accept fewer benefits (this is true for people over 56 as well, but to a much lesser extent). There are differences of opinion about the timing and the degree of this, we can quibble about when the system will be facing problems, but the fact is that social security will have to be changed in some way, shape or form.

As far as the majority not owning stock, according to the Federal Reserve Board's Consumer Finance Survey, 51.9 percent of households own stock directly or indirectly (such as through mutual funds, 401k, etc.). This number is growing rapidly; I believe it was under 25 percent in the early 1980s, but I don't know that exact number offhand. Moreover, if people don't want to control their account, then they don't have to do it. And, I would guess that the government would limit the accounts so that people can't just gamble blindly. Instead, they'd be choosing from diversified funds picked by professionals. To be frank, that last sentence scares me more than anything else I've read about changing social security. However, 20 countries have introduced an element of privatization into their retirement programs, so there are definitely enough successes and failures to put something good together. We'll see if that stands a chance in hell of surviving the political process.

I guess that what I would like to see is trading off optional private accounts (which can be controlled, passed down, etc.) by inserting some type of means testing for the remainder (i.e. the part of the program that remains a pay-as-you-go system) so the portion tagged as Uncle Sam's money functions more as a true social program that works to help those who really need the money. At the same time, some of the money remains for the person who paid the taxes.
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Since: 1.8.02
From: Huntington Beach, CA

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#22 Posted on | Instant Rating: 1.00
I wouldn't mind seeing the retirement age (for the purposes of Social Security) go up. I mean, really, it is a luxury - Americans have never been ENTITLED to a retirement on the government's dime. When the program was first implemented, most people were lucky to live long enough to collect on it.

The system was just never designed, nor intended to be a retirement account for the last decade or so of someone's life. It was meant for those people who couldn't afford to ever retire, to provide for them when they were physically too old to work any longer. Something designed to help a very few who really needed it, that became perverted into something that everyone felt was their right.

Heck, if someone presents a plan that pushes the retirement age to 75 or over, implements a means testing so that not everyone can draw the benefit - they could remove the private accounts and I would still support it.

But if the plan is to make-over Social Security so that it is a retirement program for all, I would rather see even more privatization than the little bit Bush is proposing.



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Leroy
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Since: 7.2.02

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#23 Posted on | Instant Rating: 4.01
    Originally posted by Corajudo
    As far as the majority not owning stock, according to the Federal Reserve Board's Consumer Finance Survey, 51.9 percent of households own stock directly or indirectly (such as through mutual funds, 401k, etc.). This number is growing rapidly; I believe it was under 25 percent in the early 1980s, but I don't know that exact number offhand.


Thanks for that stat - I wasn't aware of that. Although I was deliberately not including 401ks - but my understanding is that 401ks are very questionable as a stable retirement plan. Not only do most folks not control their own accounts, but adjustments for inflation were based on the market - not necessarily the rate increase of the cost of living. And a lot of the hoopla around 401ks came about during the dot.com era when everyone was reveling in the bull market.

But that wasn't the point.

Most people who own stock as part of a retirement plan have little to know clue about how their money is being invested and whether or not the investments are earning at a rate that will be adequate enough to provide for them when they retire.


Somehow, the rate of growth needs to be better than the cost of living increase - 2.7% just isn't going to cut it. Most savings accounts have a better rate than that.

    Originally posted by Corajudo
    Moreover, if people don't want to control their account, then they don't have to do it. And, I would guess that the government would limit the accounts so that people can't just gamble blindly. Instead, they'd be choosing from diversified funds picked by professionals. To be frank, that last sentence scares me more than anything else I've read about changing social security.


Ditto. It was the professionals who were recommending Enron stock a month before the whole company tanked.

    Originally posted by Corajudo
    I guess that what I would like to see is trading off optional private accounts (which can be controlled, passed down, etc.) by inserting some type of means testing for the remainder (i.e. the part of the program that remains a pay-as-you-go system) so the portion tagged as Uncle Sam's money functions more as a true social program that works to help those who really need the money. At the same time, some of the money remains for the person who paid the taxes.


There's nothing that I object to here. I'd be interested in seeing how your numbers work out - just for fun.


(edited by Leroy on 5.2.05 1344)



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Since: 9.12.01
From: Bay City, OR

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#24 Posted on | Instant Rating: 8.81
Just out of curiousity, besides the Rich Dad Poor Dad guy, who is questioning 401k as a retirement device?

I know there are some of the Bond guys (not the movies, the guys in investing who only want you to buy bonds or stocks with dividends) that mutter about this occasionally, but on the whole the 401k thing doesn't seem like a scam to me.

I'm interested to see why other people here believe it.



Willful ignorance of science is not commendable. Refusing to learn the difference between a credible source and a shill is criminally stupid.
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Why not? It isn't relevant because the thread was about Jane Fonda and someone made a non-sequitir to reference Karl Rove (not meaning to call you out Brian, just sayin').
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