Show Me the Money (AlterNet on Social Security)

[mike_c]

http://www.alternet.org/story/21302/

Show Me the Money
By Mark Weisbrot, AlterNet. Posted February 19, 2005.

Bush's privatization plan for Social Security is a case where it helps to read the fine print.

<snip>

Now let's do the numbers: say you are a 27-year-old worker with average wages when the plan takes effect for you in 2011. Assume that you put the maximum allotted amount into the private account. Let's also assume that the administrative costs, and the cost of converting the lump sum to an annual payment are the cheapest imaginable.

When you retire after 40 years, your combined benefit from the private account and the traditional Social Security system will be $1371 per month. This compares to $2127 that the current Social Security program, if left alone, has promised to pay.

Supporters of privatization would reply that the system can't pay all promised benefits. If absolutely nothing is done to increase Social Security's revenue – a very remote possibility – then benefits will be cut by about 24 percent in 2053. But even then, the monthly benefit in the above example would be $1,625 – still 19 percent better than in the privatization scheme.

Interestingly, when the government takes back the money that it loaned you, it doesn't come out of the private account that it went into. Rather, it is deducted from the benefit that you receive from the traditional Social Security program. This will create the illusion that most of your benefits come from the private account – rather than from the traditional system. This indicates that the people who designed this privatization scheme want to undermine support for the traditional Social Security system – so as to get rid of Social Security as we know it altogether.

[nodictators]

1. The private account would have to be worth more than $250,000...

...at retirement to even hope to have the same benefits as Social Security would have provided.

As the article noted, it would be very expensive to transition the money from the private account to an approved annuity.

The Social Security Administration has a very low overhead of about one-half percent. In other words they take 50¢ for every $100 that passes through there. So, Social Security is a hell of a good bargain compared to the money grubbers on Wall Street.

Bush used the $250,000 number in his radio address last Saturday. He claimed that a worker who made $35,000/year would have a quarter of a million dollars in their account at retirement. He neglected to mention that all of that and more would be needed just to match the Security Security benefits that the worker would have gotten if they had opted to stick with SS.

As Sen. Boxer noted in her speech about SS, the private accounts are the mechanism Bush and his followers will used to destroy SS.

No one, except the money grubbers on Wall Street and elsewhere, will "get rich" from opting into private accounts.

[mike_c]

4. that's the point....

No one, except the money grubbers on Wall Street and elsewhere, will "get rich" from opting into private accounts.

Aside from the ideological class warfare issue, of course. Wealthy and powerful captains of industry HATE the notion of government safety nets for folks who live via earned income, even if the safety net is provided out of the working class's own wages for the most part. Nice bonus that a raid on SS-- one of the most successful programs in the history of U.S. government-- presents an opportunity for those same wankers to get their hands on several trillions of dollars in investment funds to invest in their own corporations.

[98geoduck]

2. The corporate whores will be laughing their way to the bank...

[lovuian]

3. Your right this is a attack on Social Security for Americans

and they want to destroy it!!!