Would privatizing Social Security to allow individuals to invest in the stock market be a good idea?

[Scott K]

Imagine the bailout that would be needed if social security was part of the current mess.

[Jules]

What about all the idiots who lose all their social security money in the stock market especially in a time like this. Social Security is there for "security" so you have something left to fall back on. So many people are totally irresponsible with their money and when they lose it they'll be begging for some sort of welfare.

[The Bush Twins]

Yeah, its a win win situation for the Brokers and the Traders.

Market goes up they make money on your SS when you sell.
The Market goes down they make money on you SS when you sell.

[wildrose]

For me, that is risky either way. what do you mean by "privatized"? Would that mean SSI is still controlled by the government (look what happend to it), or does it mean invested in and owned my the people (private sector).

Either way, I wouldn't trust the security of my investment. Government let Wall Street do whatever they wanted with our money and we got screwed. The Government has run the Social Security Programs and we got screwed. either way we get our asses whooped.

[Moose]

If you are young and could choose to put a portion of you SS taxes into a private account, you better believe it. I would bet there will be no SS around in 30 years, but a smallcontributionn to stock market in your own account would be a good idea, the market is cyclical and now while stocks are low is a good time to invest, it will go up over time as it historically always does.
SS was never intended as a way to support yourself, only to supplement your retirement.

[hawaii traveler]

Republicans like to privatize profits....but when things go wrong - they want to socialize the losses.

[Pissed Off]

After watching the market for the last little while ,it won't just be old folks that will be a burden on society. You all will.

[Chris K]

Not at all, did you miss what happened to peoples 401k's this week?


OBAMA BIDEN 2008-2016

[AndiGravity]

No, it wouldn't be a good idea. I sometimes find myself wondering if the fiscally conservative stayed awake long enough in economy class to hear the terms "economy of scale" and "collective bargaining position".

A million people collectively can weather off a much larger loss than one person can. Individual people have much less money to spread around in investments, and have to concentrate their efforts in one area more. Great if everything you touch turns to gold, but one bad turn can wipe you out. If you have the investing power of a million people, though, you can spread the money out much more to protect against anyone being wiped out if one investment area goes south for the winter.

A million people can also negotiate a better deal with banks lending firms since most banks are going to be a lot more interested in getting their hands on several million dollars a month than they would be getting their hands on a hundred. Individually, banks and investment firms can offer much harsher deals to customers because an individual customer walking away doesn't do them much harm. Individuals end up in a bargaining position where they have the greatest amount to lose, and investment firms end up in a position where they have the least amount to lose or gain.

Individual transactions are trivial when it comes down to the amount most people can invest. The only time it's important is in looking at the collective whole. If they lose one customer, so what? There are still 999,999 transactions for the firm to make good on. Losing one person isn't so important. The individual, on the other hand, only has one deal to strike. If you can't make a deal, you're stuck. That's a lot riskier if you don't have anyone else sitting on your side of the table to back you up.

If all one million people will walk away as a group, though... that gets their attention a bit more. One blown effort, one bad negotiation, and the investors who want your money to turn their profit with lose it all. That puts the situation on much more equitable footing. You've got a million people backing you up, and now the transaction gets closer to the "one and only" point for the people who want you all to invest. They're much more likely to cut a bit of fat off their side of the deal and hand a better plate to the consumer if there's a real risk they can lose everything.

So there's a lot of stability and power to leaving things in a collectively managed pot.

In any case, what exactly is truly privatized Social Security except abolishing Social Security? The whole point of Social Security is that it's not left in private hands. It's the government taking control of some of the money to provide the citizens of the country some basic security during retirement besides their own private savings and investments. That's it. That's what it is.

The United States government can (or should, if they're not) hire economists and investors who specialize in these matters, so they can direct the flow of money to make its investment more profitable.

Most people can't afford to do that, and don't have the education or economic savvy to know the difference between when their broker is pushing them toward a certain investment plan because it's in their best interests, because it makes him the most money, or because it's the quickest way to get them out of his office so he can see a client who makes him a lot more money.

And what are we going to do when the private investments go south? Are we going to let senior citizens languish away and die in the streets, or are we going to step in, intervene, and save them by providing them with a minimal income?

If we're going to do the first, what does that say about us as people? If we're going to do the second, isn't that what we do now?

We've seen what leaving this matter entirely in private hands is like. Social Security was created to combat what leaving this matter in private hands was like. Dumping it back off on people who can't take care of the matter isn't the solution to the government mismanaging the money. Hiring people who will manage the money better is.

[doglover]

Absolutely. Count on it. People must be MADE to save. Many of them can't, or do not know how. There would be no security.