Privatizing Social Security

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Now that the Republicans are in charge, I fear that they may try to privatize Social Security.  And there are plenty of folks, not me, who think this is a good idea.  They’ll say it’s the only way to save Social Security, a system that may not be viable by the time our kids retire.  Social Security is one of many safety nets under attack by the move to privatize everything from education to health care.  The theory is that people should just be responsible for their own thing – to save, to educate, to medicate – all that stuff.  Gone is the idea of a social contract where the government serves the duel role to provide and protect as articulated in the Preamble to the U.S. Constitution:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

Some on the right will argue that Congress should raise the retirement age to 90.  Now it’s true that when Social Security was enacted in 1935, the  average life expectancy of an American was 62 – 59.9 for men, 63.9 for women.  With retirement age set to 65, a typical American would never see a social security check.  And with some many employment category exclusions, – domestic workers, teachers, public employees, non-profit and agricultural workers, many women and non-white Americans were not even covered.  While patently unfair, the system was designed to be solvent.  Over the years, more workers were included.  With people living longer – in 2014, life expectancy for U.S. males is 76; females, 81, there is no question some change need to be made to stabilize Social Security, which could include raising payroll taxes, granting undocumented workers Social Security cards and disqualifying the uber wealthy from receiving benefits they do not need. The retirement age to receive full benefits was already raised to 67, and one can receive partial benefits as early as age 62.  But even so, with all the baby boomers like me set to retire sometime in the next 15 years, and with more people having access to health care and living longer, Social Security is expected to become insolvent by 2037.

Privatizing Social Security means that you, American reader, would be in charge of managing and growing the payroll taxes you pay into the system.  You will no longer have a guaranteed “pension” for life.  If you screw up, or entrust it to a broker who makes off with your money or saddles you with so many fees and loads that your nest egg stagnates or dwindles –  tough luck, there’s no bailout.

Honestly, could you invest in mutual funds, stocks and bonds on your own with confidence that you would have enough to retire on?  Good luck.  Even the experts who manage mutual funds have spotty performance records and very often take enormous risks based on their best guesses of what the market might do.  Any crash or correction, which can happen anytime, could wipe you out. And you end up paying management fees to fund companies for the privilege of watching it all happen.

But don’t be fooled. Under the privatizing scheme, you won’t have complete control of  your money. You won’t get a lump sum to do with what you please.  You can’t go to Vegas with it or to the race tracks.  You won’t be able to sink it all into the next promising startup.  You won’t be able to put it under your mattress either which might be the safest place for it.  Privatize means you hand your nest egg over to corporate America, who, after taking their cut, will strike out for you.

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