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This week I read about the Federal Bureaucracy discussed the proposal to privatize Social Security? - girl123 - 12-16-2012 06:22 PM
This week I read about the Federal Bureaucracy discussed the proposal to privatize Social Security. One aspect of that plan is to allow individuals to invest most, if not all, of their own money into investments, rather than into the Social Security System.
(1) Given recent economic events, do you believe this plan will be effective?
(2) How would this plan affect you?
- Savannah Guy - 12-16-2012 06:30 PM
First of all while it is discussed periodically I do not believe privatization will ever happen. The reason is simple - the Social Security funds have been taken by Congress and spent as soon as they were received almost since the program's inception. There are nothing but IOU's in the so-called "lock box" of social security. The program has to take tax money from you today to hand it to a social security recipient tomorrow, it's a direct wealth transfer program because there is no fund.
That being said, no matter how scary the market can be with its ups and downs and bubbles, if my money had gone there at least there would be something. The absolute worst case would be a complete market crash globally all the way to zero, which would decimate the world economically but would only be the equivalent of the social security trust fund today (zero balance).