For no good reason, the idea of private social security accounts isn’t taking off. It really does not matter much to me. No where in my retirement planning do I account for SS payments. Once my money is in the government’s hands, I don’t consider it mine. Of course, even if I don’t need the money, which I hope I will not, you can be darn sure I’m going to take everything I can get. So for me, private accounts make a lot of sense. It’s like gambling (as if it’s that risky) with other people’s money.
But now the Democrats feel, and rightly so, that they should offer an alternative plan since they are so resolutely against introducing risk into social security. They believe that citizen’s should not be given the choice to act in a fashion that may improve their lives. Of course, this logic follows as it eminates from the minority party. (Additionally, shouldn’t they be out trying to dismantle every single lottery system, casino, sports book, horse track, and dog track in the country?) But I digress, from the AP
Among the ideas being considered, according to congressional aides speaking on the condition of anonymity, are improvements to existing retirement savings programs, such as trying to increase participation in corporate 401(k) plans by automatically enrolling workers. Under current law, workers must opt into such programs.Another idea in a more developmental stage is a civilian version of the Thrift Savings Plan, the 401(k)-style program that federal employees can invest in on top of the contributions they make to Social Security.
As I’m not really in the work force yet, I don’t have a complete grasp of 401k’s. But by “automatically enrolling workers” aren’t they just telling workers what to do with their money? I think 401k’s are great, but should they be mandated?
And the article goes on to mention many more tweaks to current retirement systems, but nowhere does it appear that the actual social security system should be tweaked. Of course they are all based on market investments. The same type of market investments they feel are so deplorable within the SS system.
So while the proposals are generally not bad, why not introduce them in addition to social security reform with the option put SS funds into private accounts?
Addendum: I just found this interesting data on why long-term, broad investments are such a good idea. (yeah, yeah. I know that past performance is no prediction of future results).
This chart illustrates how fast past bear markets have made a recovery:
Dates of Bear Months to Bottom Percentage Drop Months to Recovery July – Aug 1998 2 -15.4 3 June – Oct 1990 5 -14.7 4 Sep – Nov 1987 3 -29.5 18 Dec 1980 – July 1982 20 -16.9 3 Jan 1977 – Feb 1978 14 -14.1 5 Jan 1973 – Sep 1974 21 -42.6 21 Dec 1968- June 1970 19 -21.3 9
And this
Chance in the Past of Making Money in Stocks
Any 1 Year 72% Any 3 Years 84% Any 5 Years 90% Any 10 Years 97% Any 15 Years 100%
