What exactly does privatized social security mean?

[Acid09]

I get that it means taking it out of government hands and putting it into the private sector. To me that sounds like PERA. But I'm not an expert either. What I want to know are what are the pros and cons of privatized social security.

[wdx2bb]

Don't know what PERA is, but you are basically right -- you'd put all or some or your designated money in private investments. Good - might make more money that way and help some companies; Bad - might lose your retirement stake completely. Most people would rather be sure of having something for them at retirement age, so I think it won't go through.

[RWLake]

Privatized social security means the individual wage earner has the option to invest a percent of his social security benefit in predetermined investments. The down side is financial markets go up and down ( as we have seen from the current situation). The positive side is over time investments via the stock market grow at a much better rate then where social security traditional invest. All financial advisers will tell you in order for an investment portfolio to grow to the amount that is needed for retirement it most grow more than inflation. Traditional, social security investments are placed in very safe accounts that make less than 3% a year. This barely beats inflation and as a result will never grow to secure a successful retirement. This is why anyone living strictly on SS has a very low level of existence. In addition, when investing for retirement a person isn't really concerned what the acct is worth tomorrow, but instead is concerned about how much will be in the account when he or she retires. That could be 20-40 yrs later. History shows accounts invested for that period of time do very well. Hope this helps.