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General discussion

Social Security Reform

Feb 19, 2004 11:45AM PST

It has been asked why Bush deserves to be re-elected. Aside from the compelling National security issues, high among them on my priority list is Social Security. I favor letting Americans opt to save for our own retirements. There appears to be some momentum building for this, and I believe under Bush it will FINALLY come to pass.

http://www.washingtontimes.com/commentary/20040129-082817-6880r.htm

Evie Happy

Discussion is locked

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Sounds like the SS bureaucrat that I talked to as a high schooler.
Feb 19, 2004 11:22PM PST

The basic idea is that people cannot be trusted with their own money. Kind of insulting isn't it? Stick it in a regulated mutual fund. How hard is that?

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You'll notice, KP...
Feb 20, 2004 4:52AM PST

That DK does not 'belong' to social security. Instead he is in a system which allows him to have a degree of control over how his 'retirement' is invested and managed.

Bo

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Huh?
Feb 20, 2004 5:03AM PST

Where did you get the idea that he doesn't put money into Social Security? The university program into which he contributes is in addition to Social Security.

http://www.utorp.utsystem.edu/

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And I really think you owe DK an apology.....
Feb 20, 2004 5:13AM PST

...for your "typical liberal" remark above, since your assumption about what he is doing was incorrect.

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Not so fast, Josh...
Feb 20, 2004 10:10PM PST

Typical liberal may have been a little bit much, but in DK's own words:
'Teachers in many states (including Texas) are also exempt from SS -- in fact, the law discriminates against retired non-SS teachers, who aren't allowed to collect spousal benefits, unlike any other person who never paid into Social Security. The logic behind that is mystifying, at least to me!'

And I also KNOW that my wife is not covered by SS. In fact although she has contributed enough to SS to be qualified due to many years on second jobs, she can NOT draw ONE SINGLE CENT from it.

The assumption here is that being a Texas teacher (even at the university level), he is a participant in TRS and therefore not soley dependent on SS.

Bo

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Re: Not so fast, Josh...
Feb 22, 2004 1:04PM PST

Not true, Bo.

Only K-12 teachers aren't covered by SS -- university teachers are in SS plus either TRS or the ORP. Frankly, TRS is a better deal IF you stay the course and retire in Texas, but if you don't make tenure (about 2/3 don't), then you lose all the state's matching money, so ORP is generally the preferred route unless you're hired at a tenured level.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Re: You'll notice, KP -- wrong again, Bo!
Feb 20, 2004 12:04PM PST

I do indeed belong to Social Security, but have an additional retirement program which is self-directed. But I have taken the time to learn about investing, and I DO take a lot of time with my investments.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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How about some tips? That would be great! (NT)
Feb 20, 2004 12:27PM PST

.

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So don't you think others ...
Feb 20, 2004 11:31PM PST

... who also take the time to research such things should be given the opportunity to guide their own futures? It doesn't take much to open up a CD account and buy a few municipal bonds. Even in this day of rate of return for such, it is higher than we get from SS.

Evie Happy

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Re: So don't you think others ...
Feb 22, 2004 1:11PM PST

Hi, Evie.

>> so you don't think others who also take the time to research such things should be given the opportunity to guide their own futures?<<

First, of all, everyone can do that now through an IRA and/or 401k (we have those, too, btw). Secondly, either you're not bothering to read my messages (just as you accuse me of doing), or you're inentionally misrepresenting what I'm saying. I am NOT opposing limited privatization AS LONG AS THERE'S A LEVEL PLAYING FIELD, in that there's an approved list of investment companies to protect the naive, and the fees are the same for all participants regardless of account size. And, btw, no self-directed brokerage accounts (I don't have those available to me, either); mutual-fund-like investments only, so pros are mking the decisions, presumably based on careful research. All three of those points are characteristics of the ORP program to which I belong, btw.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

Either you're doing what you

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I'm confused ...
Feb 22, 2004 1:38PM PST

... have been reading your posts all along. Your first post was a blanket rejection of "how the Republicans want to do it" with none of the caveats you have now enumerated. We are not all that far apart on this issue. At least in the short term the allowable accounts would have to be regulated/certified as approved for such funds. But everyone benefits if that regulation is not so tight as to stifle creativity and competition for the investment. It will return billions to the private sector where it belongs. I'm not even against State or even the Federal government vying for some of those dollars by offering special retirement bonds or somesuch which would presumably offer an attractive safe option to all. The difference is that the person would own the money which means that come next legislative cycle, it can't be taken away.

You seem to be living in the olden days in terms of fees and costs. While I'm sure there are options out there that carry higher fees for smaller investments, there are just as many that charge a flat percentage of portfolio worth, and even some that only charge a percent of your gain. IAC, I think that part of your argument is a non-issue. In fairly short order such an account would grown in size to the levels at which reduced fees kick in anyway.

Now as to having these options already, that's true. But as you are so fond of pointing out, once the poor have paid their 12% to the government for SS and taken care of daily expenses, there's nothing left to save. You know, I bet that if poor people saw their 6% accruing in their accounts, they would probably be motivated to add another 1% or so on that they might not otherwise bother with in a separate plan. Just human nature I think.

Evie Happy

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Re:I'm confused ...
Feb 23, 2004 12:54PM PST

Hi, Evie.

If you reread my first post it wasn't "blanket," but I didn't spell out ALL my specific objections to the Republican plan -- I mentioned the main one, that naive first-time investors would be sheared by con men and unfair fees. Not did I say what alternatives I could support -- after all, that's what a thread is for Happy

>>You seem to be living in the olden days in terms of fees and costs. While I'm sure there are options out there that carry higher fees for smaller investments, there are just as many that charge a flat percentage of portfolio worth, and even some that only charge a percent of your gain. <<
Not so Evie -- I have a fair number of investments, spread around more than they probably should be (I DO believe in diversification!) Many mutual funds still have loads close to 6%, on top of the annual management fees, which can also vary considerably (Vanguard is consistently among the lowest-fee fund families, though many of their managed stock funds aren't that great; you can't beat them for index and bond funds, though!) An almost all brokerages now charge commisions that vary with your total assets with the firm; a couple of the web-only brokers (e-trade and Ameritrade, for example) still charge one low fee regardless, but if you have a problem getting customer service can be difficult.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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I could make a good case that those brokerages are inappropriate ...
Feb 24, 2004 7:18AM PST

If we are asking people to invest Social Security equivalents then I think we could make a good case that the accounts should be limited to no-load mutual funds. The catch is that really savvy investors would seriously object to that.

There is no perfect solution. Privatization opens a whole can of worms, but failing to privatize almost guarantees financial disaster for the next generation. Furthermore, failure to privatize will probably prolong the shell game that the feds have been playing with the government budget.

IIRC even the Clinton years did not show a true surplus if Social Security had been carved out of the figures. Not sure about that, but in any event our view of the federal budget is seriously obscured by the lax accounting the Feds are permitted to use.

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Do I not recall.....
Feb 22, 2004 9:22PM PST

that one of your complaints about any plan previously proposed for privatization would provide a 'windfall' for investment houses?

<i>I am NOT opposing limited privatization AS LONG AS THERE'S A LEVEL PLAYING FIELD, in that there's an approved list of investment companies to protect the naive, and the fees are the same for all participants regardless of account size.</i>

Tell me how this wouldn't do just that. And if a Republican administration were in office, you would be screaming 'rich get richer', 'breaks for big business', ad nauseum.

Bo

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Re: Do I not recall.....
Feb 23, 2004 12:57PM PST

Hi, Bo.

perhaps my use of the word "windfall" was ill-chosen. A privatization plan would of course increase profits for the investment industry, and I have no problem with that as long as there's value for money. But one feature of the SS system is that everyone is treated equally regardless of income; I'd want the same feature in a privatization plan, which flies in the face of the variable asset-based fees now typical in the investment industry.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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'everyone is treated equally regardless of income'??? I don't think so ...
Feb 24, 2004 7:21AM PST

(1) Anybody who is self-employed is treated differently from anybody who works for an employer.
(2) Benefits do depend on earning history.
(3) There are people over 65 who are not eligible for Social Security because of their economic history. This seems to happen mostly to women who lived all their lives on farms but I think there are others who 'fall through the cracks'.

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Ok, I'm confused
Feb 21, 2004 4:32AM PST

Lets see if this is correct.

You don't have to belong to the SS program.

You do belong to the SS program.

So you pay SS taxes by choice?

And BTW, correct if wrong, you have no state income tax in Texas?

roger

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Re: Ok, I'm confused
Feb 23, 2004 9:52PM PST

Hi, Roger.

I have no choice about belonging to SS. And yes, Texas has no state income tax. Our sales taxes are 8?%, though (food and medicines excluded), and we're now in the bottom 10 states in per capita spending on most social services -- have been steadily dropping ever since the Republicans took control of the State in the mid-90's (and those two factors are NOT unrelated!) Sad

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Re:Social Security Reform
Feb 21, 2004 12:40AM PST

I read this link and tried to ingest it as best I could. The one thing that bothers me, at the very end "Peter Ferrara, senior staff member, Reagan White House, Cato Institute 1980.???
I believe this when they screwed up the SS for Railroad Employees & Post Office Employees and some others if I recall. It was what they referred to as double dipping. Railroad Employees did not pay into SS at that time. Many RR retirees could collect both from RR retirement and SS if they had the quarters paid in from other employment. The Reagan administration killed it. Anyone with under 10 yrs service started paying SS. RR retirement was lumped into SS. Over 10 yrs service you got RR retirement and any SS quarters earned lumped into RR. retirement.
Either way you lost. This idea sounds like another bait & switch program to screw somebody out of their hard earned penion funds or SS. I probably am all mixed up reading this link, but I'm for leaving SS alone. Don't let Bush or anyone else mess with it. Save into whatever retirement plans you can on your own. Don't let the Gov. play with it. You will never be able to live off it anyway. Don't make it any worse with something it takes a Phili lawyer to figure out.

George

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Re:Re:Social Security Reform
Feb 21, 2004 2:10AM PST
I probably am all mixed up reading this link, but I'm for leaving SS alone. Don't let Bush or anyone else mess with it. Save into whatever retirement plans you can on your own. Don't let the Gov. play with it. You will never be able to live off it anyway. Don't make it any worse with something it takes a Phili lawyer to figure out.

Unfortunately, if SS is left alone it will go bankrupt. Bush assigned a bipartisan commission because none of our politicians seem to have the guts to be honest with the American people to explain what a debacle SS really was. It was never a retirement plan. When instituted, life expectancy was 62 ... that alone ought to tell us something. An increase in the age of eligibility is inevitable, as are reductions in benefits or increased taxes that have the same effect.

I entered the workforce with the notion that SS might not be around by the time I need it.

I want to save on our retirement plans and save for myself that extra 6%. The government is doing a piss poor job of managing that, and I don't want to be held hostage by politicians every election year. Bottom line is that given the record of the Federal govt., there is no assurance of any security in SS, just assured dependancy. If I could have saved 6% since day 1 in a retirement account in addition to the rest that I've saved it would be more than enough to retire on. And actually, the eventual goal should be 12%, because that includes the "employer's contribution" -- IOW money they pay on your behalf that they would otherwise pay you.

Evie Happy
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Re:Re:Re:Social Security Reform
Feb 21, 2004 4:02AM PST

Thanks Ivie. That clarifys this topic a little bit. When I read the last few lines in italic. "Reagan" "White House" "Cato Institute 1980" it blew me apart because of what they did back then. Some of the engineers even went to court to sue. Course that was fruitless.
SS really does'nt effect me, because I lost it in that reform. I do receive RR Retirement which is more anyway, but this mumble jumble of how they are going to change things to benifit the poor who really need it after working all their life thinking SS will be there because they paying into it, is unreal. If the Gov. stops sucking all the funds out of it for other projects maybe it will be there.
Who knows maybe this idea will work. The logic of it is beyond me.
I'm not trying to critize you on this. You certainly have a lot more knowledge on the subject than I do. But, beware of the Wolf in sheeps clothing or whatever I'm trying to say.

Have a Good Day, which I notice elsewhere its like a bad day at the OK corral.

George

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Re:Re:Re:Re:Social Security Reform
Feb 21, 2004 4:25AM PST

Hi George,

I'm unfamiliar with the RR deal, etc. so will take the time to look into that.

I don't see, however, how this can be a problem because it is giving us the opportunity to control our own retirements. It is also voluntary, so anyone who wants to trust the government to do right by them with SS the way it is can do so. I would like to know more about what the credit would be for that which I have already paid in. I'm getting to that point where if it doesn't come about soon, I am probably better off staying with the program cuz I've paid in for quite some time now.

Bottom line for me is that the experiments where groups were waivered to invest their SS tax instead of paying it all are paying out like 3-fold what they would otherwise have gotten. The politicians, and particularly the Democrats, have a vested interest in keeping the elderly dependant and poor.

Evie Happy

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Re:Re:Re:Re:Re:Social Security Reform
Feb 21, 2004 4:54AM PST

I am one of the elderly am fortunately not depndent or poor. But i do have a question and it is, will an emplayer have to match $ for $ what the employee chooses to invest or will he be on his own? And will those diverted $$'s be removed from the amount of SS the employer now matches? If so then those figures must be factored into the return realized.

I think that SS should be kept the way it is. Pvt investment is a pvt matter for those who are able and confident that they will make proper choices. SS at least guarantees something for every one! And does not include NOTHING for those who were foolish enough to put their money into Enron for retirement purposes.

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Read the article ...
Feb 21, 2004 4:57AM PST

... it tells you. I'm not presenting myself as some SS expert here.

As to private investment remaining private, fine. But SS is compulsory public investment.

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Re:Read the article ...
Feb 21, 2004 8:34AM PST

I did. It skirts or ignores the questions I have asked and which you should have asked before using it as a basis for the stand you have taken!

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Re:Re:Read the article ...
Feb 21, 2004 9:40PM PST

I misread your post slightly. No, the employer would not match the 6%, their 6% still goes to the government to make good on SS payments to current and imminent recipients. Ideally the employer would not be involved at all, but we have that outstanding obligation. You do realize that any benefits the employer pays on your behalf are really payments you make don't you? If they didn't have to pay that they would pay you more. Think I'm wrong? Talk to any small construction firm owner. When my hubby worked construction as an employee, he was often hired as a self employed contractor at a higher wage. If he was hired as an employee, the employer would have had to pay unemployment, SS, etc. and my husband would have received a lower wage. Now, granted, he then paid this himself out of that wage, but that's the point of reform. Allowing him to save that money for himself in the event that he lost his job or for his retirement.

Every American would benefit from getting to keep and manage their own 6%, but if you would rather the government continue doing the wonderful job they are doing for you, be my guest. Eventually, the employer portion would be phased out too.

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Re:Re:Re:Re:Re:Re:Social Security Reform
Feb 21, 2004 9:38AM PST

Hi Gearup

Excellent question Gearup, but I do not think the article wants you to know that.
I think what it all boils down to. The working man today is paying dearly into the system and realizes he will never recuperate his forced investment if he lives to be 100 under the present system. I'm referring to 30, 40 yr olds. So lets change it.

I'm with you, leave what we HAVE got and try to improve on it. There is no reason why they can't pay out more for the Seniors that depend on it as the system now stands or at least keep it solvent.

They have just got to keep their fingers out of it and leave all the money paid in, alone.

George

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Re:Social Security Reform
Feb 21, 2004 10:03PM PST

You two sound like the article, or more specifically the Cato proposal, is trying to put one over on you. I'm confused. I see that you are wary of the author of the proposal, but you have admitted that your RR retirement is more than you would have gotten from SS. So where's your beef?

There is no reason why they can't pay out more for the Seniors that depend on it as the system now stands or at least keep it solvent.

Huh? How?

The problem is that SS has become the retirement income for too many who incorrectly assumed or were led to believe that it is/was a pension plan of sorts. It's a vast sum of money in the hands of politicians full of promises, and there is NO guarantee that things won't change down the line. My name is not on some account somewhere. Do you know why a bipartisan commission was assembled to discuss and deal with this outside the elected body? Because Congress doesn't have the guts to tell the public the truth about SS -- that they will HAVE to raise the retirement age and/or reduce benefits if it is even to remain solvent.

Evie Happy

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Re:Re:My Beef is
Feb 22, 2004 12:30AM PST

Had they left it alone as it was prior to that change. I could have collected both SS & RR Ret. such as many politicians are doing today. (not RR, but Gov. Pensions)

By changing it to lump one into the other. (manditory) I lost approx. 1/3 of what I would have received today had I been allowed to collect both. I paid into it both. At the time I believe it was 7% RR and 3 or 4% SS. At the self employed level it was more.

Anyway the real issue here. Is this reform good or bad for the future of retirees and not DC.

George

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Re:Re:Re:My Beef is
Feb 22, 2004 12:51AM PST

Hi George,

I understand your beef, but it is really over a different issue in the sense that, had this reform been in place back then, you would have all that 6% from wherever you got the income in an account with your name on it. The way SS was set up in the first place was a mistake. I mean at that time, most people worked for one place their entire lives and men were the major (if not only) breadwinners in the family. Personally I would like to see SS dismantled entirely, but we have to phase it out becasue of the obligations already there.

Evie Happy