Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe Stock Market Drop Exposes the Dangers of Privatizing Social Security
http://www.nationofchange.org/2015/08/25/the-stock-market-drop-exposes-the-dangers-of-privatizing-social-security/The stock market continued a period of volatility on Monday. Media reports sounded the alarm as the DOW opened 1,000 points down and other indexes took huge hits, only to climb back up a bit later in the day. While that performance, which had some people calling it black Monday, may have knocked a good deal of money out of peoples 401(k) retirement accounts, Social Security benefits remain by and large untouched by such fluctuations.
Some Republicans, however, are interested in changing that.
In June, presidential candidate Jeb Bush said that he thinks the next president will have to try to privatize Social Security. Others have gotten behind the idea as well: Sen. Rand Paul (R-KY) drafted a plan in 2013 that included partial privatization, and Sen. Ted Cruz (R-TX) is in favor of using private accounts. Rep. Paul Ryan (R-WI) has included privatization in his budget blueprints.
The market drop, and ones before, expose the dangers of such a plan, which usually entails diverting some or all of the money workers contribute to Social Security through their paychecks into private investment accounts. That would put individuals in charge of making smart enough investment choices in the market to make big enough returns to support themselves in retirement.
But the reality is thats not within reach for most individual people. During a market rout like Mondays, many people will panic and sell. We know a lot of people do what economists say is irrational, they sell at a low point, said Dean Baker, co-director of the Center on Economic and Policy Research. Research shows that the best thing to do during a downturn is to hold out if possible. But thats not how most people will react. People see something like this and go, I better get out, Baker said. When they see the market start to go up, they say, I better buy in, and then theyve lost a lot.
This is one of the big problems with privatizing Social Security: individual investors dont tend to be that savvy in chasing higher returns. A lot of people make wrong decisions, Baker said. This is even true when it comes to retirement planning: Many people leave money on the table with their 401(k)s by not taking advantage of employer matches or cash out when they switch jobs and incur taxes. The point of Social Security contributions is to make saving for retirement mandatory, he pointed out. But if you do that and then just tell people to do whatever you want [with the money], then a lot of people will make mistakes and end up with not very much in retirement.
InfoView thread info, including edit history
TrashPut this thread in your Trash Can (My DU » Trash Can)
BookmarkAdd this thread to your Bookmarks (My DU » Bookmarks)
2 replies, 709 views
ShareGet links to this post and/or share on social media
AlertAlert this post for a rule violation
PowersThere are no powers you can use on this post
EditCannot edit other people's posts
ReplyReply to this post
EditCannot edit other people's posts
Rec (5)
ReplyReply to this post
2 replies
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
The Stock Market Drop Exposes the Dangers of Privatizing Social Security (Original Post)
eridani
Aug 2015
OP
Stargazer99
(2,599 posts)1. Still the idiots vote Republican because they can live
without social security (their wealth supports them) and they could care less about you
Warren DeMontague
(80,708 posts)2. yeah, that's pretty much a no-brainer.
The "privatize SS" people tend to shut up, when the market takes a hit.
Go ahead and invest for retirement, 401ks, etc...
but the whole point of SS is to have set benefits which aren't tied to shit like... the stock market.