Keep your eye on the SSAN ball
Do not accept as gospel what is said about social security reform. Have some one run the numbers for your age when the proposals become more clear.
AP made unsupported claim about expected benefits under Bush Social Security proposal
In a January 5 Associated Press article, AP writer Leigh Strope made the unsupported claim that, under the Bush administration proposal to reduce promised Social Security benefits and supplement the system with private investment accounts, the combined retirement income of the two "would be expected" to equal or exceed benefits promised to retirees under the current system.
Strope wrote:
For example, a person retiring in 2012 with an annual income of $35,277 is promised $1,194 in monthly benefits, in 2001 dollars. If the formula is changed, the monthly benefit would be reduced by 0.9 percent to about $1,183 per month.
The younger the worker, the more dramatic the cuts. For a person retiring in 2075, the monthly promised benefit of $2,032 would be cut by 45.9 percent to $1,099 a month.
In each case, income from the worker's private account, funded with a portion of their Social Security tax, would be expected to at least make up the difference.
The Bush administration has not yet released a fully detailed proposal or offered concrete estimates of the proposal's expected effect on future retirement income. But The Washington Post paraphrased chief Social Security actuary Stephen Goss, who based his comments on a plan that "Republicans close to the White House" outlined for the Post, as saying that if such a plan is enacted, total expected retirement income -- including guaranteed Social Security benefits and income from the new private accounts -- "would not match the benefits currently being promised." The Post reported the example of a middle-income worker retiring in 2052 whose expected combined income would be 6 percent less than that promised under the current system. THIS REQUIRES MATHEMATICAL CALCULATIONS AND ASSUMPTIONS REGARDING WHAT SORT OF ANNUITY YOU CAN PURCHASE WITH YOUR INDIVIDUAL RETIREMENT ACCOUNT PORTION OF THE "NEW" SOCIAL SECURITY.
Under any private account proposal, a portion of this income would depend on the performance of individual workers' investments. The numbers cited reflect expectations about average investment returns and would not apply equally to all workers. The average retiree would receive less retirement income than promised under current law, while others would potentially receive even less.
As Media Matters for America has previously noted, some economists believe that the assumptions about future equity returns -- on which the provided numbers are based -- are overly optimistic.
— D.B.B.
AP made unsupported claim about expected benefits under Bush Social Security proposal
In a January 5 Associated Press article, AP writer Leigh Strope made the unsupported claim that, under the Bush administration proposal to reduce promised Social Security benefits and supplement the system with private investment accounts, the combined retirement income of the two "would be expected" to equal or exceed benefits promised to retirees under the current system.
Strope wrote:
For example, a person retiring in 2012 with an annual income of $35,277 is promised $1,194 in monthly benefits, in 2001 dollars. If the formula is changed, the monthly benefit would be reduced by 0.9 percent to about $1,183 per month.
The younger the worker, the more dramatic the cuts. For a person retiring in 2075, the monthly promised benefit of $2,032 would be cut by 45.9 percent to $1,099 a month.
In each case, income from the worker's private account, funded with a portion of their Social Security tax, would be expected to at least make up the difference.
The Bush administration has not yet released a fully detailed proposal or offered concrete estimates of the proposal's expected effect on future retirement income. But The Washington Post paraphrased chief Social Security actuary Stephen Goss, who based his comments on a plan that "Republicans close to the White House" outlined for the Post, as saying that if such a plan is enacted, total expected retirement income -- including guaranteed Social Security benefits and income from the new private accounts -- "would not match the benefits currently being promised." The Post reported the example of a middle-income worker retiring in 2052 whose expected combined income would be 6 percent less than that promised under the current system. THIS REQUIRES MATHEMATICAL CALCULATIONS AND ASSUMPTIONS REGARDING WHAT SORT OF ANNUITY YOU CAN PURCHASE WITH YOUR INDIVIDUAL RETIREMENT ACCOUNT PORTION OF THE "NEW" SOCIAL SECURITY.
Under any private account proposal, a portion of this income would depend on the performance of individual workers' investments. The numbers cited reflect expectations about average investment returns and would not apply equally to all workers. The average retiree would receive less retirement income than promised under current law, while others would potentially receive even less.
As Media Matters for America has previously noted, some economists believe that the assumptions about future equity returns -- on which the provided numbers are based -- are overly optimistic.
— D.B.B.
Comments
This discussion is going to bore the average attention deficit deficit American. Nevertheless, the average annual return on funds invested in the Social Security system right now is 1.8 percent after inflation. The average return for stocks is 7.4 percent per year. That's over the period from 1926 to the present, including the Great Depression. In the past 200 years, in fact, stocks have averaged a 10.4 percent annual return before inflation.
Boring or not, this is why I used the term "stupid" when I refer to those issues which a vital to the vast majority of citizens. The average Joe better know the pluses and minuses of social security reform.
I agree the stock market will do better than the current return on the social security "trust fund". Since the government is borrowing from itself, there really is no return.
However, the devil is in the details. What are these individual accounts going to be permitted to invest in and who will profit from this. Administrative costs for 401(k)'s and the like eat up the return. The mutual fund managers take a cut as well. This system may be the biggest growth industry of the future if it is truly privatized. But as you know, the fund managers and admin costs are not based upon profit per se.
The key to this program working is that it is mandatory, conservative, and no funds can be withdrawn for any reason other than death or disability until normal retirement age (what ever that is).
This won't affect you or I, unless in our golden years, the young people say screw you old people and terminate social security for those that won't have a large account.
My personal opinion is the Conservative agenda really is freedom of choice, no social safety net. This would in my opinion be a disaster, because Joe six-pack won't save unless required to do so. Are we really going to allow beggars in the streets by the droves???